Upbeat ADP Jobs Report Not Enough to Stop the Dollar’s Slide

The U.S. Dollar closed lower against a basket of major currencies on Thursday. The primary driver of the weakness was the Euro which accounts for about 57% of the index. The single-currency rallied on continuing strength in the Euro Zone and on increased bets the European Central Bank would continue to trim its stimulus and perhaps raise rates by the end of the year.

The EUR/USD was supported by data that showed the Euro Zone economy closed out 2017 with the strongest growth in nearly seven years. The Euro was also boosted against the dollar by the narrowing of U.S.-Euro Zone debt spreads. This move reflects increasing speculation that the ECB would eventually joint the Fed in normalizing monetary policy.

In other news, the dollar continued to be pressured by a sharp rise in commodity-liked currencies like the Australian, New Zealand and Canadian Dollars. All three are being supported by rising gold prices. The Loonie is also getting a boost from stronger crude oil prices.

U.S. Economic Data

The Challenger Job Cuts report came in at -3.6%. According to the report, U.S. employers announced plans to cut 32,423 jobs in December, bringing the year’s total to a low not seen since 1990.

“The tight labor market, coupled with uncertainty surrounding health care and tax legislation, possibly kept employers from making any long-term staffing decisions this year,” CEO John Challenger said in a statement. “However, 2018 may see an increase in job cut announcements, as companies realign with consumer demand.”

The ADP Non-Farm Employment Change came in at 250K, beating the 191K estimate. The month was the best for job creation since March and topped the 185,000 in November, a number that was revised lower by 5,000.

Weekly Unemployment Claims rose to 250K. This was higher than the 241K estimate and the previous week’s 247K.

Gold

Gold posted a two-sided trade on Thursday. The market was under pressure early in the session as investors continued to react to Wednesday’s somewhat hawkish U.S. Federal Reserve minutes. Gold also weakened after the release of the upbeat ADP private sector jobs report. However, the market recovered to close higher after the U.S. Dollar fell against a basket of currencies, particularly the Euro.

Crude Oil

U.S. West Texas Intermediate and international benchmark Brent crude oil rose to their highest levels since early 2015 on Thursday, on concern that the escalation of unrest in Iran will eventually have an effect on supply and another decline in U.S. inventories as refining activity hit a 12-year high.

According to weekly government statistics, U.S. stocks fell more than expected, continuing a steady drawdown of supplies in the world’s largest oil consumer, though stocks of distillates and gasoline rose on heavy refining activity driven in part by year-end adjustments.

U.S. Equity Markets

The major U.S. stock indexes rallied to new all-time highs on Thursday, led by the Dow Jones Industrial Average which broke above 25,000 for the first time, tying the fastest 1,000-point move in its history, following the release of stronger-than-expected jobs data.