In few hours, all eyes will be focusing on the US Jobs Report, which will be released around 12:30 GMT+, which likely to have a notable impact on the markets.
The report includes the Non-Farm Employment Change, Unemployment Rate, Average Hourly Earnings.
Why NFP Will Be Complicated Today?
Today’s report outcome will be a little bit complicated, and whatever the outcome is, it will be used by the new administration as an excuse or to show how the US economy is growing.
There two scenarios when it comes to politics, If the numbers come in with ugly data, the majority in the market will blame this slowing down on the recent hurricanes that hit Texas and Florida.
On the other hand, a strong report, which would be a shock, this will be used politically to show that Trump’s economic plan is working.
The question remains at the end, which one the market will pick? No one knows for now.
Other Data to Keep an Eye On
The majority of retail traders usually follows the three main figures, including the unemployment rate, the non-farm payroll and the average hourly earnings MoM.
Yet, there are many other figures to watch, including Private Payrolls, Manufacturing Payrolls, Government Payrolls, Labor Force Participation Rate, U6 Unemployment Rate and the Average Earnings YoY.
Traders need to understand that it is not only about the new jobs created or unemployment rate, the general outlook of the report is the one to watch in full.
What Matters the Most?
After looking at all the data, you need to keep an eye on the wages growth, we are not talking about the MoM Average Hourly Earnings here.
We are talking about the long-term wages growth, which is the YoY Average Earnings. The Federal Reserve is looking for higher wages in order to push inflation higher once again.
Even if the NFP comes in with better than expected and unemployment rate declines further, while the wages continue to slow down, don’t expect the US Dollar to rally.
If wages remain on the downside, the possibility for higher inflation remains weak, in return, this would put more pressure on the Federal Reserve to keep the current rates on hold.
Today’s Estimates
Estimates for September’s Jobs Report is marginally softer than August, and it seems that economists did factor in the recent storms effect.
We would agree with the economists this time, NFP may add between 100K-80K new jobs, while the Unemployment Rate is set to remain at 4.4%. At the same time, the Average Hourly Earnings is expected to rise by 0.3% on MoM, while the YoY is set to remain stable at 2.5%, which is the lowest level of this year.
USD Levels to Watch
The US Dollar Index managed to break its short term down trendline on the daily chart yesterday, after breaking above its 93.80’s and 94.0 resistance area, reaching as high as 94.15 earlier this morning.
The next immediate resistance stands at 94.85, followed by 95.0 and 95.50, which should be watched very carefully, as a break above these levels, would open the way for a medium-term retracement, which may continue toward 97.0 areas.
Otherwise, the bearish outlook is here to stay, and any rally is expected to be limited below the mentioned levels.
Edited by:
Nour Eldeen Al-Hammoury
Market Analyst
