The ADP Employment Change in the US rose to an average of 11,750 new jobs per week for the four weeks ending December 20, up from a revised figure of 11,000. This shows that the US private sector is still creating jobs, though at a modest pace. Since 2025, the average has been 2,320 jobs per week, with a high of 17,500 in November and a low of -11,750 during that time.

Currency Movements

Today, the US Dollar gained strength against the Japanese Yen. It also saw a 0.35% rise against the British Pound but fell 0.10% against the Canadian Dollar. The heat map displays these percentage changes among major currencies. The market response to this report has been calm, with the US Dollar Index staying around 99.00, up 0.15% for the day. The EUR/USD pair dropped slightly, falling 0.10% to about 1.1650. Traders are looking ahead to the upcoming US CPI data for more direction. The ADP report, which tracks weekly changes in private employment, can impact consumer spending and economic growth. It often serves as an early indicator before the US Bureau of Labor Statistics releases its Nonfarm Payrolls report.

Market Attention and Expectations

The latest ADP numbers indicate a small increase in private-sector hiring, confirming that the job market is growing, but not too quickly. This suggests a soft landing could be possible, but the growth rate is modest compared to stronger data we saw in November 2025. This consistent data gives the Federal Reserve little reason to change its cautious approach. Currently, this jobs report is not attracting much attention, as the market is focused on the upcoming CPI inflation data. Throughout 2025, inflation cooled but remained above target, making the next number a key market mover. If inflation is high, it could push back expectations for the first interest rate cut. For those trading interest rate derivatives, it’s important to monitor shifts in Fed expectations. The CME FedWatch Tool shows that the market is lowering its bets on a rate cut by the March FOMC meeting, a big change from a month ago. As a result, positioning for “higher for longer” rates via SOFR futures options might be a smart strategy. The strength of the US Dollar, especially against the Japanese Yen, reflects the ongoing interest rate difference between the US and other countries. As long as the Fed stays more hawkish than the Bank of Japan, we believe long USD/JPY positions will continue to attract interest. We are also watching options on the US Dollar Index; if it stays above the 99.00 level, it could signal further gains, especially if inflation data is strong. With mixed signals from a slowing labor market and ongoing inflation, we expect volatility to remain significant in the coming weeks. The VIX is around 15, indicating uncertainty rather than outright fear. This environment may be good for strategies like straddles on major currency pairs ahead of the CPI release, as it allows for profit from significant price moves in either direction. Create your live VT Markets account and start trading now.

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