According to the ADP employment survey, 32,000 jobs were shed in the US in September. This was a stark contrast to expectations from a Bloomberg survey, which had forecast a gain of around 50,000 jobs. The US Dollar (USD) came under pressure following the data, losing about half a cent against the Euro (USD), Commerzbank's Head of FX and Commodity Research Thu Lan Nguyen notes.

Threat of a total FOMC takeover by the president seems reduced

"However, this reaction was likely not only due to the unexpectedly poor numbers but also because the release carried more weight than usual. Due to the government shutdown in the US, the official jobs report, originally scheduled for release tomorrow, will be delayed. As a result, the ADP survey temporarily serves as the sole indicator for last month’s employment developments. Still, one should not place too much emphasis on these numbers, as we have frequently pointed out that the relationship between the ADP figures and the official data is rather loose."

"However, the dollar's weakness was short-lived. Later in the day, EUR/USD reversed course and moved southward. This was in part due to the Supreme Court’s first decision regarding President Trump’s attempted dismissal of Fed Governor Lisa Cook. Trump had asked the court to approve her dismissal, but the justices announced that Cook would remain in her position until the hearing in January. This dealt a blow to the president, who likely hoped to replace Cook, much like Adriana Kugler, with a loyalist as soon as possible. Such a move would have significantly increased pressure within the FOMC toward faster and more aggressive rate cuts."

"I speculated some time ago that the unwavering faith in the 'checks and balances' of the US - or, more precisely, in the independence of the judiciary - might be a key reason why the US dollar has not come under greater pressure despite the unprecedented attacks on the Fed (and other institutions). The Supreme Court’s decision not to immediately comply with Trump’s demands can be interpreted as a sign that the separation of powers still works. This outcome was not necessarily guaranteed, given how other cases have been handled. Of course, a final ruling has yet to be made, and the risk has by no means been eliminated. However, the threat of a total FOMC takeover by the president seems somewhat reduced, which is good news for the greenback."