Focus is on U.S. job data for September (NFP)
The U.S. dollar traded higher against all of the major currencies ahead of Friday’s non-farm payrolls report. This strength should not catch anyone by surprise after yesterday’s strong non-manufacturing ISM release that told us just how well the U.S. labor market and services sector weathered the hurricane season. What was unexpected was the market’s disregard for the data on Wednesday but they finally came to their senses today thanks in part to hawkish comments from Fed Presidents Harker and Williams who pointed to the improvements in the economy as reasons why the Fed needs to continue raising interest rates. The latest string of U.S. economic reports were also stronger with jobless claims falling, the trade deficit narrowing, factory orders increasing and durable goods orders revised higher for August. Looking ahead, unlike past NFPs, this month’s report won’t have as much impact on the Federal Reserve’s monetary policy plans and the dollar for 2 reasons.
First the Fed isn’t expected to raise interest rates again until December and there are 3 labor market reports between now and then to evaluate.
Second this report will be distorted by the hurricanes. After Hurricane Katrina in 2005 the Bureau of Labor Statistics reported an initial loss of -35K jobs but one month later, it was revised to an increase of 67K jobs. So the prospect of revision and distortion means that market participants including the Fed will discount any significant weakness.
Economists say a weak employment report should not change views the Federal Reserve will raise interest rates in December. Fed Chair Janet Yellen cautioned last month that the hurricanes could “substantially” weigh on September job growth, but expected the effects would “unwind relatively quickly.”
The U.S. central bank said last month it expected “labor market conditions will strengthen somewhat further.”
Harvey and Irma are not expected to have an impact on the unemployment rate, which is forecast holding steady at 4.4 percent for September.
”There are competing forces at play in September, where hours worked in many sectors will see shutdown-related cuts,
With the hurricane-driven temporary unemployment concentrated in low-paying industries like retail and leisure and hospitality, average wage growth is forecast picking up.
Average hourly earnings are forecast increasing 0.3 percent in September after rising 0.1 percent in August. Still, the annual increase in wages probably remained stuck at 2.5 percent for a sixth straight month.
Based on the following leading indicators for NFPs, there’s certainly reason to believe that payrolls will surprise to the upside and if that’s the case it would reinforce the Fed’s hawkishness. Aside from watching the level of job growth, investors also need to pay attention to wage growth and the unemployment rate. If wage growth, which has been subdued for the past 3 month bounces by 0.3% as anticipated, it could offset a soft headline number or exacerbate a positive report. Investors will be more surprised by strength than weakness and for this reason we believe the dollar will have a greater reaction to strong versus weak payrolls. If job growth is 70K or higher and wages rise by 0.3% or more, USD/JPY will challenge its September high of 113.25. If job growth is anything less than 50K AND wage growth is 0.2% or less, USD/JPY will sink back down to 112.00 but in that case, the best trade will probably be to buy EUR/USD.
First the Fed isn’t expected to raise interest rates again until December and there are 3 labor market reports between now and then to evaluate.
Second this report will be distorted by the hurricanes. After Hurricane Katrina in 2005 the Bureau of Labor Statistics reported an initial loss of -35K jobs but one month later, it was revised to an increase of 67K jobs. So the prospect of revision and distortion means that market participants including the Fed will discount any significant weakness.
Economists say a weak employment report should not change views the Federal Reserve will raise interest rates in December. Fed Chair Janet Yellen cautioned last month that the hurricanes could “substantially” weigh on September job growth, but expected the effects would “unwind relatively quickly.”
The U.S. central bank said last month it expected “labor market conditions will strengthen somewhat further.”
Harvey and Irma are not expected to have an impact on the unemployment rate, which is forecast holding steady at 4.4 percent for September.
”There are competing forces at play in September, where hours worked in many sectors will see shutdown-related cuts,
With the hurricane-driven temporary unemployment concentrated in low-paying industries like retail and leisure and hospitality, average wage growth is forecast picking up.
Average hourly earnings are forecast increasing 0.3 percent in September after rising 0.1 percent in August. Still, the annual increase in wages probably remained stuck at 2.5 percent for a sixth straight month.
Based on the following leading indicators for NFPs, there’s certainly reason to believe that payrolls will surprise to the upside and if that’s the case it would reinforce the Fed’s hawkishness. Aside from watching the level of job growth, investors also need to pay attention to wage growth and the unemployment rate. If wage growth, which has been subdued for the past 3 month bounces by 0.3% as anticipated, it could offset a soft headline number or exacerbate a positive report. Investors will be more surprised by strength than weakness and for this reason we believe the dollar will have a greater reaction to strong versus weak payrolls. If job growth is 70K or higher and wages rise by 0.3% or more, USD/JPY will challenge its September high of 113.25. If job growth is anything less than 50K AND wage growth is 0.2% or less, USD/JPY will sink back down to 112.00 but in that case, the best trade will probably be to buy EUR/USD.
Comment:
Highlights of the non-farm payrolls report for September 2017
Prior was +156K
Estimates ranged from -45K to +153K
Private payrolls -40K vs +75K expected
Unemployment rate 4.2% vs 4.4% expected
Participation rate 63.1% vs 62.9% prior
Wages data:
Average hourly earnings +0.5% vs +0.3% expected
Prior average hourly earnings +0.1%
Average hourly earnings +2.9% vs +2.6% expected
Average weekly hours 34.4 vs 34.4 expected
Hurricane Irma hit during the survey week.
Prior was +156K
Estimates ranged from -45K to +153K
Private payrolls -40K vs +75K expected
Unemployment rate 4.2% vs 4.4% expected
Participation rate 63.1% vs 62.9% prior
Wages data:
Average hourly earnings +0.5% vs +0.3% expected
Prior average hourly earnings +0.1%
Average hourly earnings +2.9% vs +2.6% expected
Average weekly hours 34.4 vs 34.4 expected
Hurricane Irma hit during the survey week.
Comment:
Move to higher
Comment:
Atlanta Fed President Bostic
Continued strength in jobs, wages would make him comfortable about a hike
Jobs report shows strength in wages
More from the Fed's Bostic: He's in wait-and-see mode on December hike
Continued strength in jobs, wages would make him comfortable about a hike
Jobs report shows strength in wages
More from the Fed's Bostic: He's in wait-and-see mode on December hike
Comment:
North Korea rumors hurting US dollar
The rumors cite some dubious Russian sources but they're doing the round. The same rumours do the rounds every weekend, and sometimes they're inevitably right.
Today's rumours is that North Korea will test a missile that's capable of hitting the US west coast this weekend.
The rumors cite some dubious Russian sources but they're doing the round. The same rumours do the rounds every weekend, and sometimes they're inevitably right.
Today's rumours is that North Korea will test a missile that's capable of hitting the US west coast this weekend.
Comment:
pinbar (price action)
Comment:
Comment:
break
USD
Average Hourly Earnings m/m
Non-Farm Employment Change
Unemployment Rate
www.investing.com/economic-calendar/