Today’s FX daily begins with a very simple question: will the market react more strongly than usual to ADP now that Friday’s NFP data may be delayed? FX options market makers appear to be struggling with how to price NFP in the overnight volatility market and have been slow to price out the additional premium associated with Friday’s NFP number as the government shutdown persists and the BLS offers tentative guidance on NFP data delays. It stands to reason ADP may serve as an imperfect substitute for NFP this week (provided the shutdown lasts until ADP is released) and in theory the market should react more strongly to ADP in the potential absence of official payroll data.
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Deutsche Bank