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US jobs data to redefine Fed plays
The weakness in the US dollar has been a major driver in most of the G10 currencies’ valuation in the first half of the week. The US dollar remains downbeat, although the greenback was better bid in Asia on Wednesday’s session.

The US will release the ADP employment report later today. The market predicts that the US economy may have added 170’000 private jobs in July, versus 172’000 a month ago. The consensus for the nonfarm payrolls, due on Friday, is 180’000, against last month’s positive surprise print of 287’000.

The US jobs data will certainly give a fresh swing to the US dollar. At last week’s policy meeting, the Federal Reserve (Fed) highlighted the improvement in the US labour market, perhaps basing its analysis on the latest (and sparkly) 287’000 read. Yet, it is worth mentioning that in June, the US economy added only 38’000 jobs, while in May, the US labour market's performance translated into a moderate 160’000 new non-farm jobs. Therefore, we could say that the volatility in US jobs data has recently increased, yet the visibility has become less.

Hence, a weak read for jobs data could play against the optimism regarding the Fed, pin the Fed-hawks down and further weigh on the US dollar.

A read above the consensus, 180’000, is expected to cool down the selling pressure in the US dollar, while a miss should kick expectations of a Fed rate hike further down the road.

We could talk about a solid performance for a print above the twelve-month average of 200’000. In this scenario, the probability of a September and/or a December hike could be brought back on the table.