Insights 
VT 
In October, the United States saw an increase in ADP employment change, with figures reaching 42K. This was above expectations of 25K, suggesting improvement in employment conditions.
The EUR/USD currency pair remained subdued, trading below 1.1500 due to strengthened US Dollar following the positive employment and PMI data. Similarly, GBP/USD held above 1.3000, though its upward potential was limited.
Gold Market Overview
Gold prices, after a decline, rebounded by more than 1% to near $3,970. However, the stronger US Dollar curbed further gains in gold’s value.
Stellar (XLM) emerged with a Death Cross pattern, risking a further 15% loss. The falling channel pattern broke on the downside, influenced by weakening retail demand.
The major central banks have initiated balance sheet reduction programmes which could tighten money markets. This carries risks for commercial banks as they might struggle with liquidity requirements.
Upcoming events may challenge the current strength of the Dollar, with the central banks of Australia and the UK set to meet next week. Such developments could impact market sentiment and drive currency movements.
October Employment Report Impact
The October ADP employment report came in stronger than we expected, showing 42,000 jobs added against a forecast of 25,000. This reinforces the idea that the Federal Reserve will remain cautious and hold interest rates steady for now. A stronger labor market gives them less reason to consider cutting rates.
This positive surprise has strengthened the U.S. dollar, as markets are now pricing in a lower probability of a rate cut in the near future. The CME FedWatch Tool now indicates only an 18% chance of a rate cut at the December 2025 meeting, down from over 30% last week. This data supports a more hawkish Fed stance, keeping the dollar attractive.
For currency traders, this suggests continued pressure on pairs like EUR/USD and GBP/USD. We see the 10-year Treasury yield holding firm around 4.5%, which provides a solid floor for the dollar. Derivatives that bet on continued dollar strength or further downside for the euro could be favorable.
However, we must remember that the ADP report is not always an accurate predictor of the official Non-Farm Payrolls (NFP) data due this Friday. We saw a similar situation back in August of 2023, when ADP data varied significantly from the official government numbers that followed. Therefore, the market’s reaction could reverse sharply if the NFP report disappoints.
Given this uncertainty, volatility is likely to rise in the coming days. The VIX index is already creeping up toward 19, showing growing market nervousness ahead of the NFP release. Options strategies, such as straddles on major currency pairs, could be a prudent way to trade the potential for a large price swing without betting on a specific direction.
Gold remains in a tight range despite the strong dollar, holding just below the $4,000 mark. This suggests that underlying safe-haven demand, possibly linked to government shutdown concerns, is providing support. A surprisingly strong NFP number could finally break this support, while a weak report could send gold higher.
