The data released by ADP on employment changes really doesn’t have much to do with data from the Bureau of Labor Statistics (BLS), which is always released two days later. Therefore, it cannot be concluded from yesterday’s data release that tomorrow’s non-farm payrolls figure will be particularly high, says Ulrich Leuchtmann, Head of FX and Commodities Research at Commerzbank.
ADP data does not provide any information on nonfarm payrolls
“However, the currency market reacts, when the ADP figure (like yesterday) is well above analysts’ estimates, with a strength in the USD. Not much and not permanently, but visibly.
“In this sense, currency traders remind me a little of my grandmother. She would have vehemently denied being superstitious, but she would never have hung up her laundry during Twelvetide, the period between Christmas and Epiphany. Because then, according to ancient Germanic mythology, the riders of the Wild Hunt would come and get angry if they got tangled in the clothes.”
“Apparently, currency traders are much the same: they know that the ADP data doesn’t really provide any information on non-farm payrolls, but a small long USD position can’t hurt. Isn’t it interesting how these persist so stubbornly? superstitions in the era of data analytics, trading machines and AI?”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
