ADP Report Weakens Dollar and Lowers Rate Hike Expectations

A weak private employment report from ADP Inc., released on September 2, 2026, has reduced market expectations of a Federal Reserve interest rate hike. The company reported an employment increase that decelerated from 46,000 in July to 38,000 in August, underperforming the market consensus forecast of 47,000.

The sectoral analysis reveals that while there were gains in certain sectors such as 'Education and health services' (+45,000) and 'Leisure and hospitality' (+16,000), others like 'Manufacturing', which shed 17,000 jobs, and 'Professional and business services', which cut 16,000 positions, experienced contractions.

This has led to a decrease in the market-implied probability of a Federal Reserve rate hike at its September meeting from 67% to 62%, according to the CME FedWatch Tool. The likelihood of policy rates remaining unchanged rose to 38%.

The dollar index fell marginally by 0.08% to 99.57 points following the release of the ADP report, amid lowered expectations of an interest rate hike at the Fed’s September meeting.