Will ADP’s 68K Jobs Report Shape the Fed’s Rate Cut Decision?

ADP Employment Change Expected to Show 68K New Jobs in August

Automatic Data Processing Inc. (ADP) is set to release its Employment Change report for August on Thursday at 12:15 GMT, with market expectations pointing to an addition of approximately 68,000 new private-sector jobs, down from the 104,000 increase recorded in July [1]. This report, viewed as an early signal of broader employment trends, precedes the official Nonfarm Payrolls (NFP) data from the Bureau of Labor Statistics (BLS) and is closely monitored by investors and policymakers alike [1]. The release of the ADP report comes amid heightened market anticipation for the Federal Reserve’s upcoming September 16–17 monetary policy meeting [1].

The ADP Employment Change serves as an important barometer for the U.S. labor market, as a rise in private-sector employment is typically linked to increased consumer spending and economic growth [1]. A high reading is traditionally seen as bullish for the U.S. Dollar (USD), while a low reading is seen as bearish [1]. However, the two employment reports—ADP and NFP—do not always align, with discrepancies in individual months sometimes being substantial [1]. The July NFP data, which was unexpectedly weak and prompted the removal of a key Labor Department official, has intensified scrutiny on the August numbers and their implications for U.S. economic resilience [1].

The outcome of the ADP report could influence the Federal Reserve’s decision on rate cuts. Market expectations suggest a 25 basis point cut at the September meeting, with the CME Group’s Fed Watch Tool indicating a nearly 90% probability of such a move [1]. A weaker-than-expected ADP reading could accelerate easing measures, potentially leading to a 50 basis point cut and adding downward pressure on the USD [1]. Conversely, a stronger-than-expected result may offer a slight reprieve to the Dollar, though it is unlikely to significantly alter the broader expectation for rate cuts in the coming months [1].

The labor market remains central to the Fed’s dual mandate of maintaining price stability and promoting full employment [1]. Recent data and downward revisions to prior months’ figures have already shifted the Fed’s focus from inflationary pressures to potential economic headwinds, particularly those tied to trade tariffs and their impact on GDP growth [1]. The evolving stance of several Fed officials, including St. Louis President Alberto Musalem and Governor Chris Waller, has signaled openness to rate cuts, with Waller explicitly advocating for action at the next meeting [3].

For the U.S. Dollar Index (DXY), which measures the value of the Greenback against major global currencies, the release of the ADP report could serve as a catalyst for near-term volatility. The index has been trading near four-week lows but remains below pre-July figures, reflecting ongoing uncertainty in the labor market and shifting monetary policy expectations [1]. FX analysts, such as Guillermo Alcalá of FXstreet, have highlighted key levels of resistance and support for the EUR/USD pair, emphasizing the importance of the ADP report in providing direction for the currency pair within a tight trading range [1].

In the broader financial landscape, the Fed’s potential rate cuts have sparked discussions about their impact on mortgage rates. While a 25 basis point reduction in September is expected, its effect on mortgage rates is likely to be limited, especially as lenders may have already priced in part of the expected cut [4]. The 10-year Treasury yield remains a critical factor in determining mortgage rates, with the Fed’s actions being only one component of a complex market dynamic [4]. Borrowers are encouraged to shop for competitive rates and improve credit metrics to position themselves for potential rate declines in the near future [4].

Source:

[1] ADP Employment Change Is Likely to Increase Concerns About the US Labour Market (https://www.fxstreet.com/news/adp-employment-change-is-likely-to-increase-concerns-about-the-us-labour-market-202509040730)

[2] Latest News (https://mediacenter.adp.com/latest-news)

[3] Fed hawk Musalem opens the door to possibility of rate cut (https://finance.yahoo.com/news/fed-hawk-musalem-opens-the-door-to-possibility-of-rate-cut-132533130.html)

[4] How low will mortgage rates fall with a September Fed rate cut? (https://www.cbsnews.com/news/how-low-will-mortgage-rates-fall-september-2025-fed-rate-cut/)