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03 Aug 2016
By Ipek Ozkardeskaya
US jobs data to redefine Fed plays
The US will release the ADP employment report later today. The market predicts that the US economy may have added 170’000 private jobs in July, versus 172’000 a month ago. The consensus for the nonfarm payrolls, due on Friday, is 180’000, against last month’s positive surprise print of 287’000.
The US jobs data will certainly give a fresh swing to the US dollar. At last week’s policy meeting, the Federal Reserve (Fed) highlighted the improvement in the US labour market, perhaps basing its analysis on the latest (and sparkly) 287’000 read. Yet, it is worth mentioning that in June, the US economy added only 38’000 jobs, while in May, the US labour market's performance translated into a moderate 160’000 new non-farm jobs. Therefore, we could say that the volatility in US jobs data has recently increased, yet the visibility has become less.
Hence, a weak read for jobs data could play against the optimism regarding the Fed, pin the Fed-hawks down and further weigh on the US dollar.
A read above the consensus, 180’000, is expected to cool down the selling pressure in the US dollar, while a miss should kick expectations of a Fed rate hike further down the road.
We could talk about a solid performance for a print above the twelve-month average of 200’000. In this scenario, the probability of a September and/or a December hike could be brought back on the table.
The information and comments provided herein under no circumstances are to be considered an offer or solicitation to invest and nothing herein should be construed as investment advice. The information provided is believed to be accurate at the date the information is produced. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Please note that 71% of our retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing money.
