Strong Non-Farm Payroll and Weaker ISM Manufacturing Data Send Mixed Signals
|The US Nonfarm Payrolls Change was released earlier today with the US economy adding 128,000 jobs to the economy, beating expectations of 89,000. October’s numbers were revised higher as well, from 136,000 to 180,000. The revision makes October’s headline data even stronger. The inflation component was just as strong. Although the headline Average Hourly Earnings number was a slight miss at 0.2% vs 0.3% expected, September’s number was revised from 0% to 0.4%!! Although this data is strong, the next Fed meeting isn’t until mid-December
Contrary to the NFP data, the ISM Manufacturing PMI for October came in slightly worse at 48.3 vs 48.9 expected and 47.8 last. Below 50 means that the economy is contracting. This is the third straight month of contraction. Even more worrisome is the ISM Manufacturing Price Index, which fell to 45.5 vs expectation of 49.9 and 49.7 last.
So, the data on the day is mixed…better employment, weaker manufacturing, mixed inflation. According to the CME FedWatch Tool, there is currently only a 14% of a rate cut at the December 11th meeting. However, there is a lot of data remaining, including November’s data for NFP and ISM. The stock market doesn’t appear to be concerned about the ISM data, as the S&P 500 Futures in putting in all time new highs above 3060 after this mornings data dump.
Source: Tradingview, CME, FOREX.com
Not to beat a dead horse, but as stocks continue to put in all time highs, its tough not to write about them. As S&Ps break through the long-term upward sloping trendline dating back to October of last year, the next resistance is the shorter-term upward sloping channel line from October 1st near 3066. Above that S&Ps have room to run to 3105, which is the 161.8% Fibonacci extension from the May 1st highs to the June 3rd lows. Horizontal support comes in near 3045. Next level is the bottom of the channel trendline at 3027.
Source: Tradingview, CME, FOREX.com
With the bid on stocks, the DXY is trading lower on the day and is testing previous lows near 97.14. The selloff from October 8th looks like if may have formed a flag pattern, with a target near 96. If price breaks through 97.14, the next level of support is 96.69, which is the 78.6% retracement from the lows in June to the October 1st highs. Below that support is the June lows at 95.87. Resistance is that the bottom trendline of the flag pattern near 97.70, and above that the longer term trendline and top of the flag near 98.10.
Source: Tradingview, FOREX.com
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.