Data on the US labor market is gradually trickling in over the course of the week. The highlight is of course the labor market report for August on Friday. Tomorrow, one day later than usual due to the US public holiday on Monday, we will receive the ADP index, which is often used as a leading indicator for the non-farm payrolls, but does not really correlate well with them, Commerzbank’s FX Analyst Antje Praefcke notes.
US employments reports to be decisive
“We already get the number of job openings today, the ‘JOLTS Job Openings’, which provide an indication of how many jobs are unfilled, newly created or existing, and which companies are struggling to fill. The number of vacancies has fallen steadily since the peak during the pandemic, but has not yet returned to pre-crisis levels. In this respect, there are still many vacancies, even if the pressure to find employees has visibly decreased in recent quarters.”
“The labor market report for August is particularly important this time because the previous report four weeks ago gave rise to speculation that the Fed would have to cut rates faster and more sharply than previously expected due to fears of a recession. However, the market is currently only pricing in around 30 basis points for the FOMC meeting the week after next, which seems more realistic in view of the price and economic data than the 50 basis points that the market was pricing in after the publication of the July report.”
“A relatively weak labor market report on Friday could lead to notable USD weakness again. However, our economists expect the unemployment rate to remain unchanged at 4.3%. Employment growth should be slightly higher again at 150 thousand. Today and tomorrow, the USD could see a bit of a back and forth due to the job openings and the ADP index, but without any particular direction, since Friday's report will be decisive. If it continues to show a solid situation on the labor market, major shifts in interest rate expectations for the near future and thus USD weakness are inappropriate.”
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.
Recommended content
Editors’ Picks
GBP/USD churns ahead of UK wages and labor figures
GBP/USD churned chart paper just north of 1.3000 on Monday, with markets striking a laid-back tone ahead of key UK data due to release in the first half of the trading week. UK wages and jobs additions are slated for early Tuesday, with UK Consumer Price Index and Producer Price Index inflation in the barrel for Wednesday.
EUR/USD remains depressed below 1.0900, lowest since August 8 amid stronger USD
The EUR/USD pair drifts lower for the second straight day on Tuesday and drops to the 1.0890 area in the last hour, back closer to its lowest level since August 8 touched the previous day. Bearish traders, however, need to wait for a break below the 200-day SMA before placing fresh bets ahead of the key central bank event risk.
Gold price edges lower amid stronger USD, downside potential seems limited
Gold price trades with a negative bias for the second straight day on Tuesday and is pressured by a combination of factors. Traders no longer expect another outsized interest rate cut by the Federal Reserve in November, which had been a key factor behind the recent upswing in the US Treasury bond yields.
Bitcoin targets $70,000 as bullish momentum builds
Bitcoin is retesting its key resistance level, and a solid close above this threshold could fuel its ongoing rally. Meanwhile, Ethereum has successfully breached its resistance, signaling potential upward momentum, while Ripple approaches its crucial resistance barrier.
RBA widely expected to keep key interest rate unchanged amid persisting price pressures
The Reserve Bank of Australia is likely to continue bucking the trend adopted by major central banks of the dovish policy pivot, opting to maintain the policy for the seventh consecutive meeting on Tuesday.
Five best Forex brokers in 2024
VERIFIED Choosing the best Forex broker in 2024 requires careful consideration of certain essential factors. With the wide array of options available, it is crucial to find a broker that aligns with your trading style, experience level, and financial goals.