- The ADP Employment Change report is expected to show a moderate improvement in December.
- Investors await the ADP report and further US labour data for a better insight into the Fed rate path.
- The US Dollar is showing a frail recovery attempt after hitting three-month lows.
The Automatic Data Processing (ADP) Research Institute will release its monthly Employment Change Report for December on Wednesday. The ADP report is expected to show that the United States (US) economy created 45,000 jobs in the last month of 2025, to offset the 32.000 net employment loss seen in November.
The ADP report tends to attract interest because it precedes the key Nonfarm Payrolls report, released by the US Bureau of Labor Statistics (BLS), usually two days later. The correlation between these indicators is mostly poor, but deviations in the final reading of the ADP Employment Change normally have a significant impact on US Dollar crosses.
ADP Jobs Report: The US labour market and the Federal Reserve
December’s ADP report comes amid growing concerns about US labour market’s momentum and wide divergence among Federal Reserve (Fed) policymakers about the depth of the central bank’s monetary easing cycle.
The Fed cut its benchmark interest rate by a quarter point in December, but the minutes of the meeting revealed a deeply divided monetary policy committee. The weakening labour market revealed by the latest US employment releases, combined with a stubbornly high inflation, poses a serious challenge to the bank’s monetary policy-setting activity.
In this context, the bank’s interest rate projections, the so-called dot-plot, anticipate a unique rate cut in 2026. Futures markets, however, see at least two quarter-point cuts in the next 12 months, according to data released by the CME Group’s Fedwatch tool, and this week’s labour figures might be key to tipping the scales in one way or the other.
Minneapolis Fed President Neel Kashkari underscored this dilemma earlier this week. Kashkari assessed that monetary policy is close to neutral now, but warned that higher unemployment might force the Fed to lower borrowing costs deeper than forecast.
With most of the major central banks already at the end of their easing cycles, a weak US ADP in this scenario would deepen the monetary policy divergence with the Fed, and, highly likely, crush the US Dollar’s incipient recovery. A strong employment report, on the other hand, would ease concerns about the labour market and leave inflation as the Fed’s prevailing target. This outcome would have a positive impact on the US Dollar.
When will the ADP Report be released, and how could it affect the USD Index?
ADP will release the US Employment Change report on Wednesday at 13:15 GMT, and it is expected to show that the private sector added 45,000 new positions in December.
The US Dollar Index, which measures the value of the Greenback against a basket of majors, has opened the 2026 year on a strong note, but it remains near three-week lows after a 2.5% depreciation in December
From a technical perspective, Guillermo Alcala, Analyst at FXStreet, highlights the resistance area at 98.75 as a key level to confirm a trend shift: “The US Dollar Index is showing signs of a weakening bearish trend but the pair must break and hold above the December 19 low at 98.75 to aim to the early December and late November highs at the 99.30 and 99.80 areas respectively.”
“The US Dollar, however, is not out of the woods yet. Upside momentum remains frail, and weak US macroeconomic data might resurface investors’ concerns and push the pair below December’s bottom, at 97.75. In that case, the October 1 low, at 97.46, emerges as the next target”, says Alcala.
