The dollar's Wednesday rebound faded after ADP reported private employers added just 44,000 jobs in July, the weakest reading in six months. The euro led gains among major currencies as the soft print reinforced fading bets on a Federal Reserve rate hike.
The dollar's attempt to recover early in Wednesday's session unraveled after ADP reported that private employers added just 44,000 jobs in July, well below the Dow Jones consensus forecast for 75,000. The euro led gains among major currencies, reinforcing the market's growing conviction that the Federal Reserve has room to keep interest rates on hold.
Weak ADP Print Reinforces a Dovish Narrative
ADP is no longer viewed as a reliable predictor of Friday's official jobs report, but the weak reading still strengthened an existing dovish case rather than creating a new one. Investors had already trimmed September rate hike bets over the prior two days as optimism built that the Strait of Hormuz could reopen soon, easing the risk of another energy-driven inflation shock. Treasury yields stayed soft as markets read the weaker hiring data alongside falling oil prices as further evidence the Fed can stay patient.
Where the Hiring Slowdown Hit
Job growth came almost entirely from services, which added 47,000 positions while goods-producing industries shed 3,000. Education and health services alone contributed 36,000 of the total, while financial activities added 10,000 and professional and business services added 9,000, extending a trend that has long led the sector's job growth. Manufacturing and construction managed only 2,000 and 1,000 jobs respectively.
Hotel and restaurant employment fell in July, wiping out the industry's hiring gains from the first half of the year — a swing Richardson said could be tied partly to the World Cup.
Pay Growth Diverges as Workers Change Jobs
Annual pay for people who switched jobs rose to 7% in July, the highest level since August 2025, while pay for those staying put held steady at 4.4%. ADP chief economist Nela Richardson said: "Job-changers are highly sensitive to real-time economic conditions", pointing to supply constraints in parts of the labor market.
Euro Leads the Dollar Lower
In currency markets, the dollar was the second-weakest major currency of the day, while the euro led gains, followed by sterling, with both also gaining against the Swiss franc. Friday's official jobs report is forecast to show 83,000 hires with unemployment holding at 4.2%.
Sources: ActionForex, MarketWatch, CNBC
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