Forex Marketz Daily Forex News – Fully Markets Update
Today, the United States will release its all-watched non-farm- payroll report (NFP) which is the biggest data release for the summer. It will help us and the Federal Reserve determine when the next rate hike will happen. This will be the first rate hike since 2006.
The NFP is due at 8:30 am EST and will show us how many jobs were added to the US economy in August. This will help the Fed gauge how the labor conditions are doing before making a decision to raise rates at its next policy meeting in about two weeks. Recent data has been strong and that we are on course for an eventual rate hike. The number should come in on pace for a 200,000 or plus reading today.
In other data, yesterday, the August IS non-manufacturing reading came in at 59.0 and just below the 10 year high reading of 60.3 last month. Also, yesterday, we got low jobless claims levels and the trade deficit narrowed. All indicating a strengthening economy that can support itself.
Analysts are expecting a NFP print of 220K in august with unemployment moving lower to 5.2 percent. They are also expecting hourly earnings to increase by 0.2 percent. The decline in the unemployment rate and increase in wages, if it happens, will support the Fed’s case for inflation. The inflation has stayed below their target of two percent.
Stock Markets React to the Upcoming NFP Report
Yesterday, US markets gave back their large opening gains to close mixed. The Dow Jones Industrial Average (DJIA) closed up 23.38 points. This index remains in correction territory. The S&P 500 was up 2.27 points just outside of correction territory and the Nasdaq Composite lost 16.48 points. All of these major bourses are on track to lose 1.5 percent or more this week.
The US jobs report reminds us of how important jobs are in the US. A miss could send things on a wild ride. A small miss not so much. Especially since it comes on the Friday before Labor Day and the long holiday weekend. Many traders will be absent today which could move the markets in large directions.
The markets should be wild with a lot of volatility over the next few weeks as we should not get that big clarity moment with this NFP report. Historically, data shows that markets, on average, close flat after absorbing the NFP. The S&P 500, over the last 67 jobs reports, closed positive with an average return of 0.01 percent.
