In May, US companies added 128K new jobs, the ADP showed in its monthly report, indicating a fading recovery. Market analysts, on average, expected a more than double increase.

A look inside the report is even more alarming. Very small 119 employees and small companies 2049 employees lost 78K and 14K jobs, respectively. This is a clear signal that small companies are not coping with the changing economic landscape.

On the other hand, medium and large are building strength, with more opportunities to compete on wages and additional options.

Such a report raises cautions about Fridays official employment report. It makes sense for market participants to look for signs that the labour market has reached a boiling point and will cool down further. In this environment, the Feds hawkish attitude to fighting inflation may not be timely, actively deepening the hole into which the economy is sliding.

For markets, this means more headwinds for the dollar and equities and more questions about the sustainability of the commodity rally.

Source FXPro