On Wednesday (July 2), the US ADP employment data was unexpectedly cold. The number of private sector jobs in June fell sharply by 33,000, far below the market expectation of an increase of 95,000, and the previous value was revised down from 37,000 to 29,000, setting the largest monthly decline since March 2023. . . .
At the same time, the Challenger Enterprise Layoff Report showed that the number of layoffs in June was 48,000, a monthly decrease of 48.84%, and a slight decrease of 1.6% annually, which was a significant decline from the previous value of 93,800, indicating that the pressure of layoffs has eased. After the release of the ADP data, the US dollar index fell sharply in the short term, and gold rose rapidly as a safe-haven asset. . . . .
The market focus quickly turned to the non-farm payroll report on Thursday (released ahead of schedule on Thursday due to the Independence Day holiday), and investors' expectations for the resilience of the labor market and the Fed's policy path further diverged. . . .
Market background and real-time market
Before the release of ADP data, the market's expectations for the US labor market were slightly optimistic due to the JOLTS job openings data on Tuesday exceeding expectations (5.503 million, down 112,000 from April). Some institutions and retail investors have cautious expectations for the ADP data, saying that if the ADP data exceeds expectations, it may push up US Treasury yields and the US dollar/yen; while the market expects ADP to add 95,000 jobs in June, up from the previous value of 37,000, but still lower than 183,000 in January this year. The market reaction will depend on the degree of deviation of the data from expectations. However, the unexpected cold of the ADP data completely broke this expectation. The US dollar index plunged about 22 points in the short term, reaching a low of 96.8737 and now at 96.9437; spot gold rose by about $12 in the short term, reaching a high of $3,350.11 per ounce. . . .
Nela Richardson, chief economist of ADP, pointed out in the report that although layoffs are still not common, the hesitation of enterprises to recruit and their unwillingness to fill the vacancies of resigned employees directly led to a reduction in jobs, but the growth of wages was not significantly affected. This structural differentiation echoes the "high at the beginning and stable at the end" layoff trend reported by the Challenger: 48,000 layoffs in June were a sharp drop from May, and the cumulative layoffs in the second quarter were 247,000, a year-on-year surge of 39%, the highest since the same period in 2020, but a slight year-on-year decrease of 2% in a single month, indicating that the labor market still has a certain resilience under the pressure of corporate restructuring and industry adjustment. . . .
Market reaction and sentiment changes
The ADP data directly triggered a sell-off of the US dollar, and the US dollar index fell to 96.8737 in the short term, a recent low, reflecting the market's increasing concerns about the momentum of the US economy. Pay attention to the unexpected decline in ADP data and its potential guidance for Thursday's non-agricultural report. Retail investors ADP employment fell to 10,000-33,000, the largest drop since March 2023, but the number of layoffs in Challenger companies decreased from the previous month, showing that the labor market is both resilient and weak, and market sentiment is therefore in a "confused" state. It triggered a decline in gold interest and a rise in market risk aversion. . . . . .
The US dollar index was supported near 96.80, and there was no sign of further decline in the short term, indicating that the market's expectations of the Fed's "wait-and-see" stance limited the momentum of selling. Fed Chairman Powell reiterated at the Portugal meeting on July 2 that as long as the economy remains sound, the Fed will maintain a wait-and-see attitude and assess the impact of tariff remarks on prices and growth. This statement contrasts with the market panic caused by the ADP data, and investors began to reassess the timing of the Fed's rate cut. Well-known institutions pointed out that if the non-agricultural data on Thursday is also a cold snap, the US dollar may fall further. . . . . .
The relative stabilization of the Challenger layoff data provides some comfort to the market. The number of layoffs in June was 48,000, a significant drop from the previous value of 93,800, indicating that the pace of corporate layoffs has slowed down. Challenger Gray said that layoffs in June were mainly driven by economic conditions, but there was no large-scale layoff wave. Technology, finance and manufacturing are still the hardest hit areas for layoffs. Although the total number of layoffs in the second quarter hit a four-year high, the slight year-on-year decline in a single month released a short-term stabilization signal. . . . .
Some institutions pointed out that the downward trend of ADP data and layoff data need to be analyzed in combination, pointing out that "hiring↓dismissal↓" may reflect that companies are still gritting their teeth and persisting. Although concerns about short-term economic slowdown are heating up, they are not on the verge of collapse. This view is highly consistent with the current data background, and investor sentiment is therefore swinging between risk aversion and wait-and-see. . . . . .
The impact of the Fed's interest rate cut expectations and market trends
The unexpected decline in ADP data directly impacted the market's expectations of the Fed's interest rate cut. Previously, the market generally expected the Fed to restart rate cuts in the second half of 2025, but the ADP data was unexpected and the JOLTS job openings weakened, causing some investors to bet that rate cuts may be brought forward to the middle of the year. . . . . .
Well-known institutions analyzed that if Thursday's non-farm data confirms further weakness in the job market, the US dollar index may fall below the 96 mark, and assets such as gold and the euro will be further boosted. However, Powell's "wait-and-see" statement and the stabilization signal of Challenger layoffs data have limited the market's aggressive expectations for rate cuts. . . . .
Judging from the market trend, the selling of the US dollar and the rise in gold reflect the short-term dominance of risk aversion. The Challenger report pointed out that the proportion of layoffs in the technology and financial industries is still high, reflecting that the pressure of industry adjustment has not been eliminated, and consumption and capital expenditure expectations may be further under pressure. . . . . .
Future Trend Outlook
Looking ahead, the market focus is undoubtedly on Thursday's non-farm payrolls report. Well-known institutions predict that non-farm payrolls will increase by 110,000 in June, lower than 139,000 in May, and the unemployment rate may rise from 4.2% to 4.3%. If the non-farm data continues the weak trend of ADP, the US dollar index may further drop to 94.62, and safe-haven assets such as gold and the euro will be supported; but if the non-farm data is unexpectedly strong, the US dollar may rebound quickly, and the market risk aversion will quickly subside. The stabilization signal of the Challenger layoff data provides some support for the labor market, but the pressure of layoffs in the technology and financial industries remains, and attention should be paid to the transmission effect of the industry recovery progress on consumption and investment. . . . . . .
In the short term, the uncertainty of the US dollar trend will continue, and investors need to be wary of the risk of false breakthroughs caused by data fluctuations. On the X platform, both retail investors and institutions believe that the cold ADP data casts a shadow on the non-farm report, but the resilience of the labor market and the wait-and-see stance of the Federal Reserve may limit the unilateral trend of the market. In the long run, geopolitical risks such as tariff rhetoric and the situation between Russia and Ukraine will continue to inject uncertainty into the market. Safe-haven assets such as gold may remain volatile at high levels, while the trend direction of the US dollar and US stocks needs to wait for non-farm data and the Fed's July meeting to provide clearer guidance. Investors should pay close attention to Thursday's non-farm data and the distribution of industry layoffs, and comprehensively judge the policy and market path based on inflation and consumption data. . . . . .
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At the same time, the Challenger Enterprise Layoff Report showed that the number of layoffs in June was 48,000, a monthly decrease of 48.84%, and a slight decrease of 1.6% annually, which was a significant decline from the previous value of 93,800, indicating that the pressure of layoffs has eased. After the release of the ADP data, the US dollar index fell sharply in the short term, and gold rose rapidly as a safe-haven asset. . . . .
The market focus quickly turned to the non-farm payroll report on Thursday (released ahead of schedule on Thursday due to the Independence Day holiday), and investors' expectations for the resilience of the labor market and the Fed's policy path further diverged. . . .
Market background and real-time market
Before the release of ADP data, the market's expectations for the US labor market were slightly optimistic due to the JOLTS job openings data on Tuesday exceeding expectations (5.503 million, down 112,000 from April). Some institutions and retail investors have cautious expectations for the ADP data, saying that if the ADP data exceeds expectations, it may push up US Treasury yields and the US dollar/yen; while the market expects ADP to add 95,000 jobs in June, up from the previous value of 37,000, but still lower than 183,000 in January this year. The market reaction will depend on the degree of deviation of the data from expectations. However, the unexpected cold of the ADP data completely broke this expectation. The US dollar index plunged about 22 points in the short term, reaching a low of 96.8737 and now at 96.9437; spot gold rose by about $12 in the short term, reaching a high of $3,350.11 per ounce. . . .
Nela Richardson, chief economist of ADP, pointed out in the report that although layoffs are still not common, the hesitation of enterprises to recruit and their unwillingness to fill the vacancies of resigned employees directly led to a reduction in jobs, but the growth of wages was not significantly affected. This structural differentiation echoes the "high at the beginning and stable at the end" layoff trend reported by the Challenger: 48,000 layoffs in June were a sharp drop from May, and the cumulative layoffs in the second quarter were 247,000, a year-on-year surge of 39%, the highest since the same period in 2020, but a slight year-on-year decrease of 2% in a single month, indicating that the labor market still has a certain resilience under the pressure of corporate restructuring and industry adjustment. . . .
Market reaction and sentiment changes
The ADP data directly triggered a sell-off of the US dollar, and the US dollar index fell to 96.8737 in the short term, a recent low, reflecting the market's increasing concerns about the momentum of the US economy. Pay attention to the unexpected decline in ADP data and its potential guidance for Thursday's non-agricultural report. Retail investors ADP employment fell to 10,000-33,000, the largest drop since March 2023, but the number of layoffs in Challenger companies decreased from the previous month, showing that the labor market is both resilient and weak, and market sentiment is therefore in a "confused" state. It triggered a decline in gold interest and a rise in market risk aversion. . . . . .
The US dollar index was supported near 96.80, and there was no sign of further decline in the short term, indicating that the market's expectations of the Fed's "wait-and-see" stance limited the momentum of selling. Fed Chairman Powell reiterated at the Portugal meeting on July 2 that as long as the economy remains sound, the Fed will maintain a wait-and-see attitude and assess the impact of tariff remarks on prices and growth. This statement contrasts with the market panic caused by the ADP data, and investors began to reassess the timing of the Fed's rate cut. Well-known institutions pointed out that if the non-agricultural data on Thursday is also a cold snap, the US dollar may fall further. . . . . .
The relative stabilization of the Challenger layoff data provides some comfort to the market. The number of layoffs in June was 48,000, a significant drop from the previous value of 93,800, indicating that the pace of corporate layoffs has slowed down. Challenger Gray said that layoffs in June were mainly driven by economic conditions, but there was no large-scale layoff wave. Technology, finance and manufacturing are still the hardest hit areas for layoffs. Although the total number of layoffs in the second quarter hit a four-year high, the slight year-on-year decline in a single month released a short-term stabilization signal. . . . .
Some institutions pointed out that the downward trend of ADP data and layoff data need to be analyzed in combination, pointing out that "hiring↓dismissal↓" may reflect that companies are still gritting their teeth and persisting. Although concerns about short-term economic slowdown are heating up, they are not on the verge of collapse. This view is highly consistent with the current data background, and investor sentiment is therefore swinging between risk aversion and wait-and-see. . . . . .
The impact of the Fed's interest rate cut expectations and market trends
The unexpected decline in ADP data directly impacted the market's expectations of the Fed's interest rate cut. Previously, the market generally expected the Fed to restart rate cuts in the second half of 2025, but the ADP data was unexpected and the JOLTS job openings weakened, causing some investors to bet that rate cuts may be brought forward to the middle of the year. . . . . .
Well-known institutions analyzed that if Thursday's non-farm data confirms further weakness in the job market, the US dollar index may fall below the 96 mark, and assets such as gold and the euro will be further boosted. However, Powell's "wait-and-see" statement and the stabilization signal of Challenger layoffs data have limited the market's aggressive expectations for rate cuts. . . . .
Judging from the market trend, the selling of the US dollar and the rise in gold reflect the short-term dominance of risk aversion. The Challenger report pointed out that the proportion of layoffs in the technology and financial industries is still high, reflecting that the pressure of industry adjustment has not been eliminated, and consumption and capital expenditure expectations may be further under pressure. . . . . .
Future Trend Outlook
Looking ahead, the market focus is undoubtedly on Thursday's non-farm payrolls report. Well-known institutions predict that non-farm payrolls will increase by 110,000 in June, lower than 139,000 in May, and the unemployment rate may rise from 4.2% to 4.3%. If the non-farm data continues the weak trend of ADP, the US dollar index may further drop to 94.62, and safe-haven assets such as gold and the euro will be supported; but if the non-farm data is unexpectedly strong, the US dollar may rebound quickly, and the market risk aversion will quickly subside. The stabilization signal of the Challenger layoff data provides some support for the labor market, but the pressure of layoffs in the technology and financial industries remains, and attention should be paid to the transmission effect of the industry recovery progress on consumption and investment. . . . . . .
In the short term, the uncertainty of the US dollar trend will continue, and investors need to be wary of the risk of false breakthroughs caused by data fluctuations. On the X platform, both retail investors and institutions believe that the cold ADP data casts a shadow on the non-farm report, but the resilience of the labor market and the wait-and-see stance of the Federal Reserve may limit the unilateral trend of the market. In the long run, geopolitical risks such as tariff rhetoric and the situation between Russia and Ukraine will continue to inject uncertainty into the market. Safe-haven assets such as gold may remain volatile at high levels, while the trend direction of the US dollar and US stocks needs to wait for non-farm data and the Fed's July meeting to provide clearer guidance. Investors should pay close attention to Thursday's non-farm data and the distribution of industry layoffs, and comprehensively judge the policy and market path based on inflation and consumption data. . . . . .
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The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Senior Market Strategy Analyst | CFA® Charterholder | Builder of a Million Member Profit System. To join, please click 👉🚀🚀t.me/EagleEyePrecisionAnalysis
👉：t.me/Eagle_PreciseAnalysis
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.