Upside Surprise in ADP Employment, But ISM Services PMI Disappoints

On Monday’s New York session, the U.S. ADP non-farm employment change printed stronger than expected gains of 184K versus the consensus at 148K for March.

This was also better than the previous increase of 155K, which already enjoyed an upgrade from the initially reported 140K figure.

However, the ISM services PMI fell short of market estimates, as it slipped from 52.6 to 51.4 to reflect a slower pace of expansion instead of improving to the projected 52.8 figure.

Of particular interest was the employment component, which stayed in contraction for the third consecutive month, as it came in at 48.5 for March. The prices index fell 5.2 points to 53.4, reflecting a slower increase for the month.

Read the official U.S. ISM Services PMI report for March here

Market Reactions

Intermarket Price Action: 5-min

Dollar vs. Major Currencies: 5-min

The dollar was nudged slightly higher by the better than expected ADP non-farm employment change report, but it was not enough to take it out of consolidation against most of its peers.

When the ISM services PMI turned out mostly weaker than expected, the Greenback took on a steeper drop, chalking up its largest declines against the Aussie and Kiwi.

Its losses against the Loonie were less pronounced, as the oil-related currency also reacted to a surprise build in EIA crude oil inventories, while managing to hold its ground versus the Japanese yen.

Fed head Powell’s speech barely moved the needle since he simply reiterated earlier remarks on waiting for more evidence that inflation is returning to target.

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