US Data Analysis: Big jobs number? Negative NFP looks more likely, trends could extend in gold, dollar

  • ADP reported an increase of only 167,000 private-sector jobs in July.
  • Manufacturing employment remains depressed according to ISM.
  • The broader services sector also looks depressed.

"Big jobs number on Friday" – said President Donald Trump to Fox News and the public ahead of July's all-important Non-Farm Payrolls report. 

It doesn't look that way – the NFP could be a small number or even negative.

The ISM Non-Manufacturing Purchasing Managers' Index's headline figure may resonate with Trump's trumping up of the US economy – it rose to 58.1 points against a projected fall. However, the employment component in America's services sector – consisting of around 70% of the economy – is suffering. The gauge fell to 42.1, well below estimates of 51.1, under June's score of 43.1, and pointing to contraction.

Earlier, ADP, America's largest payroll provider, reported a meager increase of 167,000 private-sector jobs, substantially below 1.5 million projected. While the firm has been finding it hard to hit the nail on the head – missing the official numbers – it does point to the general trend. 

In pre-pandemic times, an increase of 167K would be considered average, but now it points to the stalling of the recovery.

Earlier in the week, the ISM Manufacturing PMI also exceeded estimates but pointed to contraction in employment, similar to the larger services sector. 

All in all, the figures published so far are pointing to a stall in the recovery due to the resurgence of coronavirus cases since mid-June. 

NFP expectations and markets

Analysts will now be adjusting estimates for Friday's official Burea of Labor Statistics' Non-Farm Payrolls. The minority of banks that talked about a loss of positions may turn into a majority, and those foreseeing another multi-million restoration of employment are set to lower their estimates. 

The US dollar will likely extend its falls after these numbers and as fresh Non-Farm Payrolls come in. EUR/USD's flirt with 1.19 may turn into a breakout and GBP/USD may be eyeing 1.32. Gold, which topped $2,000 on Tuesday, could extend its gains. 

Even if NFP is positive like ADP's figure, the chances of a "big number" are falling. In case America's labor market squeezes after only two positive months, the effect that would exacerbate the dollar's decline and potentially push gold to even higher ground. 

It also has political implications. 

See 2020 Elections: Trump is losing his economic edge, for three robust reasons

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. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news

How do emotions affect trade?
Follow up our daily analysts guidance

Subscribe Today!    

Latest Forex Analysis

Latest Forex Analysis

Editors’ Picks

EUR/USD remains pressured after US data misses estimates

EUR/USD is trading closer to 1.1750, paring its recovery from earlier in the day as the safe-haven dollar is bid. US Consumer Sentiment missed estimates with 72 points in September. The financial woes of China's Evergrande are weighing on sentiment.


GBP/USD trades under 1.38 amid on UK data, dollar strength

GBP/USD is on the back foot, trading under 1.38 after UK Retail Sales figures disappointed with -0.9% in August, worse than expected. Brexit uncertainty and dollar demand weighed on the pair earlier. 


XAU/USD surrenders intraday gains, drops closer to $1,750 level

Gold struggled to preserve its intraday gains and dropped to the lower end of the daily trading range during the early North American session. 

Gold News

Experts say Ripple will win SEC lawsuit, which might propel XRP to new all-time highs

The latest development in the ongoing SEC vs. Ripple lawsuit is that documents are classified as privileged and blocked for public viewing. Though institutional investors are yet to take big bets on the altcoin in 2021, retail investors are actively trading in XRP.

Read more

US Michigan Consumer Sentiment Preview: Markets will have to look hard for positive signs

Consumer outlook expected to rebound to 72.2 in September. August’s 70.2 was the lowest since December 2011. Inflation and Delta variant wearing on US optimism. Markets face negative dollar risk from fading consumer optimism.

Read more