Created
: 2025.10.02
2025.10.02 19:43
The US government shutdown means yesterday's ADP report drew more attention than usual - and it wasn't good. Payrolls dropped -32k in September, with August revised from +51k to -3k. That prompted a 4bp dovish repricing in the Dec Fed funds future, with 47bp of easing now expected, ING's FX analyst Francesco Pesole notes.
"We could see a longer tail effect from this ADP print, given uncertainty around the payrolls release and general data silence, which limits directional catalysts in FX. We continue to favour a lower USD/JPY in this environment, especially as EUR faces more technical resistance. Our short-term valuation model confirms this: EUR/USD is at fair value, USD/JPY remains 1% overvalued. So far, the move lower in USD/JPY has been driven by rates and equities, with no compression yet in the JPY risk premium - something we expect as haven demand builds."
"Mitigating USD losses yesterday was the Supreme Court's decision to delay Trump's attempt to fire Fed's Lisa Cook, scheduling a hearing for January. Markets weren't deeply impacted by the firing attempt and are reacting modestly to the ruling, though it does signal stronger institutional protection for the Fed than other agencies."
"With jobless claims not expected today, Challenger job cuts for September could have an outsized impact. The dollar still looks vulnerable, but in the absence of strong catalysts, markets may become more selective rather than broadly selling USD."
Created
: 2025.10.02
Last updated
: 2025.10.02
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