It is the first Friday of the month and that means it is the release of the pivotal US jobs report; Non-Farm Payrolls. The monthly release is a significant data point for the economy, as the Federal Reserve Chairman Ben Bernanke has reiterated at the FOMC meetings that the bond-buying programme (QE) will remain if unemployment remains above 7%. Bernanke also stated that they would hike interest rates from the current record low of 0.25%, last altered in 2008.
ADP, Initial Jobless Claims and ISM Services
On Thursday both initial jobless and ADP employment figures were similar to market expectations; however the employment component of the ISM services pointed to a strong NFP print. Throughout the US and Asian sessions spot Gold has tumbled reaching a low of $1363/Oz as investors front run the expected announcement of tapering at the FOMC September meeting.
The likely market reactions to the headline figure:
-Above 200K jobs would see the USD bid across the board, further weakness for EMFX and Gold
-170-200K would still be bullish (average print for the year slightly north of 180K)
-Below 170K would be a poor number, with the USD offered, and Gold bid
-Anything below 120K would be a huge disappointment, providing large volatility for USD and Gold.
Please note that these are likely reactions, however markets can react in anyway, with any revisions to prior months blurring the price action.
The banks and brokers estimates vary, with many journalists, analysts and retail traders contributing their guesstimates on the Twitter #NFPGuesses. (Some are complete guesses with little basis and shouldn’t be the basis for trading decisions)
I am relatively bullish and an expect a print for the headline of +195K and the unemployment rate to be unchanged.