US Dollar remains on the back foot despite upbeat ADP

NEW YORK (February 5) The US Dollar Index (DXY), which tracks the performance of the US Dollar against six major currencies, is at vital support in an otherwise downbeat trading session on Wednesday ahead of the US Purchase Managers Index (PMI) releases from both S&P Global and the Institute for Supply Management (ISM). Tensions in markets over the United States (US) President Donald Trump’s tariffs are unwinding now that levies on Mexico and Canada slapped over the weekend have been paused. This coincides with some US Dollar (USD) risk premium easing this Wednesday while Chinese traders head back to their desks after the Chinese New Year, with a surge in trading volumes. 

As mentioned above, the economic data calendar shows a bulk of PMI releases on Wednesday. In Europe, the aggregate Eurozone, German, French, and Spanish PMI data have already been released earlier in the day, with final readings for January falling roughly in line to below their preliminary readings. In the US, S&P Global is set to release its reading in the early American session, with the ISM data specifically for the Services sector set to be issued just minutes thereafter. 

Daily digest market movers: ADP and S&P Global PMI positive

• The ADP Employment Change for the private sector came in as a surprise increase to 183,000, beating the 150,000 expected new jobs in January compared to 122,000 previously. 
• S&P Global revised up its final reading for the Services and Composite PMI for January. Services came in at 52.9 against 52.8 expected and the Composite at 52.7 against 52.4 in the previous reading.
• At 15:00 GMT, the ISM will release its January reading for the Services sector:
  • Services PMI is expected to tick up to 54.3 from 54.1 in December.
  • The Prices Paid component has no forecast and was at 64.4 in the previous release.
• At 18:00 GMT, Chicago Fed President Austan Goolsbee delivers a speech on the current economy at the Chicago Fed's 31st Annual Automotive Insights Symposium, held at the Bank's Detroit Branch.
• Near 20:00 GMT, Federal Reserve Governor Michelle Bowman delivers a speech on Brief Economic Update and Bank Regulation at the 2025 Kansas Bankers Association Harold A. Stones Government Relations Conference.
• Equities mildy in the red, with the Nasdaq paring back earlier losses which stood at 1% at a given point. 
• The CME FedWatch tool projects an 83.5% chance of the Fed keeping interest rates unchanged in the next meeting on March 19. 
• The US 10-year yield is trading around 4.40%, a fresh yearly low.
• Gold hits another fresh all-time high above $2,875, with investors fleeing equities and bonds, heading into bullion. 

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