Private sector employment in the United States increased by 122,000 in May, Automatic Data Processing (ADP) reported on Wednesday. This printing occurred after an augment of 105,000. recorded in April and was better than market expectations assuming an augment of 117 thousand.
Commenting on the report’s conclusions: “Employment was more widespread in May than in the past few years. The labor market continues to show continued momentum ahead of the summer hiring season,” said Dr. Nela Richardson, ADP chief economist.
What does ADP jobs data mean for the US dollar?
Better-than-expected U.S. private sector payrolls data are helping the U.S. dollar (USD) maintain strength against its main rivals in the early U.S. session. At the time of this publication, the USD index increased by 0.16% during the day, reaching 99.38.
US dollar price this week
The table below shows the percentage change in the United States Dollar (USD) against the major currencies traded this week. The US dollar was strongest against the New Zealand dollar.
| USD | EUR | GBP | JPY | BOOR | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.39% | 0.11% | 0.30% | 0.40% | 0.14% | 1.29% | 1.08% | |
| EUR | -0.39% | -0.29% | -0.09% | 0.01% | -0.25% | 0.92% | 0.72% | |
| GBP | -0.11% | 0.29% | 0.21% | 0.30% | 0.03% | 1.21% | 0.96% | |
| JPY | -0.30% | 0.09% | -0.21% | 0.12% | -0.13% | 1.00% | 0.76% | |
| BOOR | -0.40% | -0.01% | -0.30% | -0.12% | -0.28% | 0.88% | 0.66% | |
| AUD | -0.14% | 0.25% | -0.03% | 0.13% | 0.28% | 1.18% | 0.95% | |
| NZD | -1.29% | -0.92% | -1.21% | -1.00% | -0.88% | -1.18% | -0.25% | |
| CHF | -1.08% | -0.72% | -0.96% | -0.76% | -0.66% | -0.95% | 0.25% |
The heat map shows the percentage changes of the major currencies relative to each other. The base currency is selected from the left column and the quote currency from the top row. For example, if you select the US dollar from the left column and move along the horizontal line to the Japanese yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Strong labor market conditions suggest that the Federal Reserve (Fed) may remain focused on controlling inflation, with markets currently pricing the likelihood of the US central bank raising interest rates at least once by the end of 2026 at around 60%.
Combined with robust safe-haven demand resulting from uncertainty surrounding the US-Iran conflict, the Fed’s hawkish expectations continue to support the US dollar (USD) ahead of the release next Friday of the official employment report, which is expected to show an 85,000 augment in non-farm payrolls in May.
Employment FAQs
Conditions on the labor market are a key element in assessing the condition of the economy, and thus a key factor influencing currency valuation. High employment or low unemployment has a positive impact on consumer spending and therefore economic growth, increasing the value of the local currency. Moreover, a very tight labor market – a situation in which there is a shortage of workers to fill vacant positions – may also have an impact on inflation levels and therefore monetary policy, as low labor supply and high demand lead to higher wages.
The pace of wage growth in the economy is of key importance to decision-makers. High wage growth means households have more money to spend, which usually leads to higher prices for consumer goods. Unlike more volatile sources of inflation such as energy prices, wage increases are seen as a key element of underlying and sustained inflation because increases are unlikely to be reversed. When deciding on monetary policy, central banks around the world pay particular attention to wage growth data.
The weight that each central bank assigns to labor market conditions depends on its objectives. Some central banks have explicit labor market powers beyond controlling inflation. For example, the United States Federal Reserve (Fed) has a dual mission: promoting maximum employment and stable prices. Meanwhile, the sole task of the European Central Bank (ECB) is to keep inflation under control. Still, despite all the mandates it has, labor market conditions are an crucial factor for policymakers, given their importance as an indicator of the health of the economy and their direct link to inflation.
