Dollar Plunges on Weak ADP Payrolls; Japan 225 Soar on Tech Momentum

EUR/USD advanced more than 0.30% on Wednesday, buoyed by weaker-than-expected US employment figures that strengthened market expectations for a Federal Reserve rate cut at next week’s December 9–10 meeting.

The US Dollar extended its decline after ADP data showed private employers cut jobs at the fastest pace since 2023. The sharp slowdown pushed money-market pricing to imply roughly a 90% probability of a 25-basis-point rate cut next week.

The greenback softened despite a stronger-than-expected ISM Services PMI reading for November, suggesting continued expansion in the US services sector. The data, however, was overshadowed by mounting evidence of labor-market cooling.

In the Eurozone, sentiment improved after a series of firmer PMI readings. The HCOB Services and Composite PMIs rose in November, with both Germany and France posting expansions. Spain’s services activity continued to grow, albeit at a slower pace.

ECB President Christine Lagarde reinforced the positive tone, noting that underlying inflation indicators remain aligned with the central bank’s 2% medium-term target. She added that inflation is expected to stay close to that level “in the coming months.”

Traders will look to Eurozone Retail Sales and commentary from several ECB policymakers, including Vice-President Luis de Guindos, for fresh direction. In the US, the focus will shift to Challenger Job Cuts data and Initial Jobless Claims for the week ending November 29, providing another read on labor-market momentum.

Bitcoin held relatively steady early onThursday after a strong rebound in the prior session that lifted prices back above the $93,000 mark. The recovery followed a steep sell-off earlier in the week that briefly pushed the cryptocurrency near the $84,000 level.

The bounce was supported by a series of encouraging regulatory signals in the U.S. Comments from SEC Chair Paul Atkins, who indicated the agency plans to introduce an “innovation exemption” designed for digital-asset firms, helped restore confidence in the regulatory environment for crypto markets.

Bitcoin also benefited from growing expectations that the Federal Reserve will cut interest rates at its meeting next week, a development that has broadly supported risk assets.

Improved liquidity conditions have further aided sentiment. The Fed ended its quantitative tightening program on Dec. 1 and resumed large-scale repurchase operations, adding liquidity to the financial system.

The rapid swing from below $84,000 to above $93,000 highlights the current fragility of market structure, with forced short liquidations amplifying volatility across the crypto space.

Oil prices gained modestly in Asian trading on Thursday, supported by renewed attacks on Russian energy infrastructure and a lack of progress in diplomatic efforts aimed at resolving the war in Ukraine.

Market sentiment was buoyed after reports that Ukrainian forces struck the Druzhba pipeline in Russia’s Tambov region, raising concerns about potential disruptions to Russian crude flows. The escalation came as high-level talks between U.S. and Russian officials ended without progress, dampening hopes of a diplomatic shift that could ease sanctions on Russian oil exports.

However, the geopolitical lift was tempered by fresh U.S. inventory data. The Energy Information Administration reported a 574,000-barrel increase in crude stockpiles for the week ending November 28, against expectations for a nearly 1.9-million-barrel draw. Gasoline inventories surged by 4.52 million barrels, while distillate stocks climbed by 2.1 million barrels, underscoring lingering demand softness in the world’s largest oil consumer.

Oil also found support from rising expectations that the Federal Reserve will cut interest rates at next week’s policy meeting. Markets are pricing in roughly a 90% probability of a 25-basis-point reduction, a move that typically weakens the U.S. dollar and supports fuel demand.

U.S. equities advanced on Wednesday, with softer-than-expected private payrolls data reinforcing expectations of a Federal Reserve rate cut in December and helping offset pressure from Microsoft amid renewed concerns over AI-driven demand.

U.S. private-sector hiring unexpectedly contracted in November, with the ADP report showing a decline of 32,000 jobs following an upwardly revised 47,000 gain in October. Economists had projected a 5,000 increase.

ADP Chief Economist Nela Richardson said the slowdown was broad-based and led by small businesses, noting that employers continue to navigate “cautious consumers and an uncertain macroeconomic environment.”

Investors will turn their attention to Friday’s release of the delayed Personal Consumption Expenditures (PCE) Price Index— the Fed’s preferred inflation gauge—along with personal income and spending figures, which could further influence expectations for the pace of rate cuts.

Microsoft shares fell after the company pushed back on a report from The Information suggesting it had reduced sales targets linked to newer AI products, including automation-focused “agents.” Multiple divisions reportedly lowered their growth expectations after sales teams missed targets in the fiscal year ending June.

Tesla edged higher amid reports that the Trump administration plans to accelerate development of the U.S. robotics industry, potentially benefiting automation-focused companies.