DOLLAR INDEX DXYThe latest U.S. economic data released on July 30, 2025 shows:
ADP Non-Farm Employment Change: Actual increase of 104,000 jobs, significantly above the forecast of 77,000. This marks a strong rebound from the previous decline of -23,000 in June and indicates solid labor market momentum, particularly in services sectors like leisure/hospitality, financial activities, and trade/transportation. However, education and health services saw job losses. Wage growth remains steady at 4.4% year-over-year for job-stayers.
Advance GDP q/q Growth: Actual growth came in at 3.0%, beating the forecast of 2.5% and improving sharply from -0.5% previously. This suggests that the economy is expanding robustly in the second quarter
Advance GDP Price Index q/q (Inflation measure): Actual was 2.0%, slightly below the forecast of 2.2%, and down from 3.8% previously, indicating easing inflation pressures .
Interpretation of this data for Federal Reserve policy:
The stronger-than-expected job growth and GDP expansion signal a resilient economy, which may reduce the immediate likelihood of Fed rate cuts, as these indicators support sustained economic momentum.
The slightly softer inflation reading on the GDP Price Index suggests inflation pressures are continuing to moderate, which could offer some flexibility to the Fed.
Overall, the Fed is likely to view this data mix as supportive of a cautious, data-dependent approach, possibly maintaining current rates in the short term without rushing to cut, but monitoring to ensure inflation stays on a downward path.
If the Fed prioritizes strong growth and a resilient labor market, rate hikes or holds are more likely than cuts. If inflation remains subdued, it could permit a gradual easing down the line but probably not immediately.
Let me know if you want a detailed outlook on market reactions to this release or the potential Fed communication following today’s data.
#GOLD
