ADP data will affect the direction of cryptocurrencies tonight.
The ADP employment report, initial jobless claims, non-farm payrolls, etc., cause volatility in the stock, bond, foreign exchange and cryptocurrency markets mainly because they directly affect the market's expectations of the health of the economy and the direction of the Federal Reserve's monetary policy.
The relationship between employment data and economic health Employment data (such as ADP, non-farm payrolls and unemployment rate) is one of the key indicators of economic health. Job growth means more people have jobs and increased spending power, which drives economic growth; conversely, if the employment data is weak, the economy may face the risk of slowing down or recession.
Investors will judge the direction of the economy based on employment data. If the data is strong, the market may think that the economy is in good shape and the stock market may rise; conversely, if the data is poor, the market will worry about a slowdown, which will trigger risk aversion and cause the market to fall.
The Fed's monetary policy, especially interest rate decisions, is highly dependent on the state of the job market. If the employment data is strong, the Fed may be inclined to raise interest rates or keep interest rates high to avoid overheating of the economy and rising inflation; if employment is weak, the Fed may consider cutting interest rates or implementing loose policies to stimulate the economy.
Impact on cryptocurrencies:
Market participants usually adjust their positions based on expectations before the data is released. If the data is consistent with expectations, market fluctuations are relatively small; but if the data exceeds expectations or falls short of expectations, the market tends to adjust quickly, resulting in large fluctuations. For example, if the ADP employment data or non-farm payrolls data exceeds expectations, it may trigger a sharp rise in the stock market and cryptocurrency market; if the data performs poorly, it may trigger a market sell-off.
