The ADP Employment Change in the US increased to an average of 11,750 per week for the four weeks ending December 20, up from a revised 11,000. This indicates continued, though modest, job creation in the US private sector.
Since 2025, the average has been 2,320, with a peak of 17,500 in November and a low of -11,750 over the period.
Currency Movements
Regarding currency movements, the US Dollar strengthened against the Japanese Yen today. Other notable changes include a 0.35% increase against the British Pound and a 0.10% decrease against the Canadian Dollar.
The heat map shows these percentage changes among major currencies.
The market reaction to this report was subdued, with the US Dollar Index remaining around 99.00, up 0.15% on the day. EUR/USD saw a slight drop, falling 0.10% to approximately 1.1650. Traders are waiting for upcoming US CPI data for further direction.
The ADP report is a weekly gauge of private employment changes, which can influence consumer spending and economic growth. It often serves as an indicator ahead of the US Bureau of Labor Statistics’ Nonfarm Payrolls report.
Market Attention and Expectations
The latest ADP figures show a small uptick in private-sector hiring, confirming the job market is still growing but not overheating. This suggests a soft landing scenario remains possible, but the pace is modest compared to the stronger numbers we saw back in November 2025. This steady data gives the Federal Reserve little reason to change its current cautious stance.
We see that this jobs report is being largely ignored, as the market’s real attention is on the upcoming CPI inflation data. Based on the trend seen through 2025, where inflation cooled but remained above target, the upcoming number will be the true market mover. A high inflation print would almost certainly push back expectations for the first interest rate cut.
For those of us trading interest rate derivatives, this means watching for shifts in Fed expectations. The CME FedWatch Tool currently shows the market is scaling back bets on a rate cut by the March FOMC meeting, a significant change from a month ago. This suggests positioning for “higher for longer” rates through options on SOFR futures could be a prudent strategy.
The US Dollar’s strength, particularly against the Japanese Yen, reflects the ongoing interest rate differential between the US and other nations. As long as the Fed remains more hawkish than the Bank of Japan, we believe long USD/JPY positions will continue to attract interest. We are watching options on the US Dollar Index, as a sustained move above the 99.00 level could signal further upside if the inflation data comes in hot.
Given the mixed signals from a cooling labor market and persistent inflation, we expect volatility to remain a key feature in the coming weeks. The VIX has been hovering around 15, which indicates uncertainty rather than outright fear. This environment could be favorable for strategies like straddles on major currency pairs ahead of the CPI release, allowing a position to profit from a significant price move in either direction.
