Weak ADP puts a halt to the USD move higher… but not vs the GBP

The rise in the USD reversed due to the weaker-than-expected US ADP employment change from June. The release showed a decline of -33K with the prior month also revised lower to 29K from 37K previously.

The report is at odds with the JOLTs data released yesterday that was stronger than expectations (but it was for May) and the Challenger layoffs which were lower than last month (also stronger). The ISM employment component yesterday did remain weak with the index coming in at 45.0 versus 46.8 last month.

The US jobs report from the BLS will be released tomorrow at 8:30 AM ET – a day earlier than normal as a result of the July 4 holiday on Friday. The expectations are for:

• Non-Farm Payrolls: +110K (↓ from 139K in May)

• Private Payrolls: +105K (↓ from 140K)

• Manufacturing Payrolls: -5K (↑ from -8K)

• Government Payrolls: -1K last month

• Unemployment Rate: 4.3% (↑ from 4.2%)

• Average Hourly Earnings (MoM): +0.3% (↓ from 0.4%)

• Average Hourly Earnings (YoY): +3.9% (unchanged)

• Average Workweek Hours: 34.3 (unchanged)

• Labor Force Participation Rate: 62.4% last month

• U6 Underemployment Rate: 7.8% last month

Although the USD moved lower vs most pairs initially, the greenback has moved back higher as yields remain higher with the 10 year still up 4.2 basis point at 4.290%. The 2-year is lower as traders shift the expectations for rates a touch. The GBPUSD is also making new highs as investors exit their bonds on political uncertainty. The 10 year gilt is up 19.3 basis points currently and is pressuring the GBP in the process.

US stock indices are now all lower as well, with the futures now implying:

• Dow -3 points
• S&P -13 points
• Nasdaq -98 points

Taking a technical look at some of the currency pairs vs the USD:

• GBPUSD: The GBPUSD is falling to new lows and cracking back below the 200-hour MA at 1.3641 and is running lower. The price is also below the 38.2% at 1.3628 and looks toward the 50% of the move up from the June low. That level comes in at 1.35786. The pair is also below a swing area between 1.36158 to 1.36335. Staying below the 200 hour MA keeps the seller more in control technically..

• EURUSD: The EURUSD moved down to test the 100 hour MA before the report and bounced. The move higher did see the price move above a swing area up to 1.1769 but has reversed back lower toward the 100-hour MA at 1.1747. A move below the 100-hour MA is needed to increase the bearish bias with a break then looking toward the 200-hour MA at 1.1663. That level is between a swing area on the daily chart gong back to 2021/2022 (not shown) between 1.1669 to 1.1693. So far the 100 hour MA is standing strong as support (blue line on the chart below).

• USDCHF: The USDCHF bounced yesterday from its lowest level since 2011, finding support at a lower trendline where buyers stepped in to halt the sharp decline. The rebound moved the pair toward yesterday’s high but has since rotated lower. The price remains below the higher 100 hour MA which corresponds with the low from yesterday/last Friday at 0.79568. For buyers to gain more control, the pair needs to break above these resistance levels. Until then, sellers remain in control of the USDCHF.

• USDCAD: The USDCAD is trading lower at 1.3637 after stalling yesterday near the 50% midpoint of the move up from the June low, which came in at 1.3668. Earlier today, the pair moved above and below the 100-hour moving average, currently at 1.3642, but momentum faded, and the price has returned toward session lows. The next key downside target is last week’s low at 1.3617. A break below that level would shift the focus to the low for the week (from yesterday) at 1.3591. On the topside, it would now take a strong break above the 100-hour MA to give the buyers more confidence and shift some control in their favor.