Markets “holding their breath” as the United States prepares to release another important monthly jobs report today, with the numbers potentially giving either green or red light for US Federal Reserve to raise rates next month, and the current expectations “evenly split”.
What will move the needle today:
The Bureau of Labor Statistics will release the monthly Employment Situation Report, featuring July figures, on Friday at 8:30AM EDT (12:30GMT) with investors anticipating a rebound following June’s weak data:
Nonfarm PayrollsJun Forecast Jul 57 80 Unemp. RateJun Forecast Jul 4.2 4.2
Source: Morningstar
JPMorgan's Take
In a note this morning JPMorgan’s chief US economist Michael Feroli told clients: “A strong jobs number would reinforce higher-for-longer pricing and put upward pressure on rates”. Feroli stated this would “likely put some downward pressure on equities in the immediate aftermath. Markets might celebrate a soft number if it signals a greater chance of lower prices before longer”.
Dollar & Gold Consolidated
After last week’s rout, the US dollar index (.DXY) is posting small gains for the first time, up 0.25% to 99.93 from a short-term low. Gold is trading steadily above $4,200 after its last bounce and investors now wait for the US Non-Farm Payrolls release to give the direction of the yellow precious metal.
Oil Extends gains
Oil prices are also pushing higher as tensions in the Middle East continue, increasing investor concern.
NFP Trading 101
How is the August NFP released and its importance, here's the lowdown: “One the of most influential, if not THE most influential data release every single month, it sets the tone regarding potential future moves by Fed policymakers. One absolute, number-one NFP traded guideline, is to buy high on a stronger number; sell low on a softer one. The number itself should be treated, not as significant, but rather… in line with the market expectations, is significant if it is significantly above or below previous market expectations. The US Bureau of labor reports consists of; the number of jobs created, the un unemployment rate; the average wage price (critical if for inflation reading;) and prior month revisions".
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