USD/JPY drops below 108 as USD selloff intensifies on disappointing employment data
- ADP employment data missed the market expectation by a wide margin.
- US Dollar Index slumps below 97 in the early NA session.
- Coming up: Markit and ISM Services PMI reports from US.
The USD/JPY pair lost more than 30 pips in a matter of minutes after the disappointing employment data from the U.S. put the greenback under a heavy selling pressure and slumped below 108. As of writing, the pair was down 0.17% on a daily basis at 107.95.
The monthly report published by the Automatic Data Processing (ADP) revealed that the employment in the private sector grew by 27,000 in May following April's 275,000 reading and missed the market expectation of 180,000 by a wide margin. The dismal data ramped up the expectations of a Fed rate cut with the CME Group FedWatch now showing a 64% probability of a total of 75 bps rate cut by the end of the year. The US Dollar Index, which was flat on the day near 97.20 ahead of the data, was last seen losing 0.3% on the day at 96.85.
Later in the session, the IHS Markit and the ISM will be both releasing their non-manufacturing PMI figures. The reaction to the ADP data today suggested that sellers are looking for opportunities to short the USD and more weak data could force the pair to continue to push lower.
Moreover, after spending the day flat near yesterday's closing levels, the 10-year US T-bond yield turned south and was last down 1.5% on a daily basis to allow the bearish pressure to remain intact.
Technical levels to consider