|

Nonfarm Payrolls Preview: employment in the background as election looms

The US will release its October employment figures this Friday, but considering what happened this week with the FOMC, is clear that market's attention is somewhere else, specifically, in the local Presidential election. There's no favorite candidate, no clear winner at sight, and the toing and froing on who's leading polls has took its toll on financial markets, concerned over the future of US's foreign policy on a Trump victory. And while there's no guarantee that Mrs. Clinton will maintain the status-quo, markets have been inclined to think that she will.

In the meantime, the US economy has been doing good. However, there was no bright spot these last month, with macroeconomic figures being for the most, just ok. The employment sector has continued to stabilize, with weekly unemployment claims holding near four decades lows, in line with solid growth. The ADP private survey released last Wednesday, showed that the private sector added 147,000 new jobs in October, missing expectations of 165,000, although September figure suffered a strong upward revision, up to 202K from the originally reported 154K. Gains were concentrated in the services sector, but manufacturing shed 18,000 jobs according to the survey.

The US is expected to have added 175K new jobs during October, while the unemployment rate is expected to tick back lower to 4.9% from current 5.0%. As for wages, forecasts point to a 0.3% advance monthly basis, although the result may surprise to the upside, given the recent up-tick in spending. If the headline figure is in line with market's expectations, wages will determinate dollar's directional momentum.

 A positive macroeconomic note was the release of spending figures last Monday, as it rose by more than expected in September, up by 0.5%  after falling by 0.1% in August. The US PCE price index recorded a 0.2% increase in the month, unchanged from the previous month,  while the year-on-year increase was of 1.2% from 1.0% previously. The core PCE remain unchanged at 1.7% yearly basis. Inflation is rising, but still at a too modest pace, to force the FED into a rate hike.

Overall, the market is expected to offer a limited reaction to the news, as long as there's no shocking figure, either up or down, and wait for the outcome of the US Presidential election.

EUR/USD levels to watch

The EUR/USD pair is on retreat mode this Thursday, in spite of tepid US data after reaching a critical resistance area, the 1.1120 region. The level is a long term resistance/support, in where rallies either direction stalled multiple times over the last months. It also stands for the 61.8% retracement of the latest daily slide, and to reinforce the strength of the area, the daily chart shows that the 100 DMA stands just a few pips  above it. The price is currently around the 50% retracement of the same decline around 1.1060, and seems poised to consolidate around it ahead of the release.

The main resistance, is then the mentioned 1.1120 price zone, with a break above it exposing the 1.1160 level, another strong long term static resistance, ahead of 1.1200. The key support on the other hand is 1.1000/10, the next Fibonacci support, with a break below it probably seeing the pair closing the week in the 1.0900/50 region. 

Author

Valeria Bednarik

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

More from Valeria Bednarik
Share:

Editor's Picks

GBP/USD hits multi-week tops around 1.3560

GBP/USD gathers fresh steam and advances to new three-month peaks near the 1.3560 zone on Friday. Cable’s sharp move higher comes after three daily drops in a row and follows the increasing selling pressure hurting the Greenback.

EUR/USD pops to fresh two-month highs, targets 1.1600

EUR/USD advances markedly, revisiting the upper 1.1500s for the first time since mid-June. The pair’s sharp uptick comes on the back of a strong retracement in the US Dollar amid BoJ intervention chatter and despite steady uncertainty in the Middle East.

Gold picks up pace, approaches $4,400

Gold rebounds toward the $4,400 mark per troy ounce on Friday, reversing the previous day’s pullback. The precious metal’s recovery comes as fresh and intense weakness keep weighing on the US Dollar, while traders keep assessing easing expectations of an imminent Fed interest rate hike and the situation from the Middle East.

Pi Network Price Forecast: PI extends consolidation as bulls eye $0.10
Pi Network (PI) price holds steady on Friday, maintaining a consolidating tone for three consecutive days. Mild retail strength in the PI token remains stable, with Open Interest above $9 million, while social buzz eases. PI token’s technical outlook is mixed, as bearish momentum wanes to neutral, with bulls eyeing the $0.1000 psychological level.
 Weekly focus: Some relief in US inflation concerns

Actual inflation data for July came out as expected with a 0.1% m/m increase in headline CPI and 0.2% excluding food and energy. Annual headline inflation remains too high at 3.4% and means that wage earners are experiencing stagnating spending power at best, and core inflation is a bit higher than the inflation target of two percent would suggest.

Why is Crude Oil priced for a reopening the ships haven't made?
Fourteen vessels crossed the Strait of Hormuz on Tuesday. Before the war, the count ran near 120 a day. In the sessions since the waterway was publicly declared open, Brent has drifted back to $87 and West Texas Intermediate (WTI) to $81, both a little lower again on Wednesday, with daily momentum on each unwound from the top of its range in late July to the low twenties now.