Today’s U.S. labour market data could set the stage for the Federal Reserve’s next move. Given that CPI m/m readings and CPI y/y readings have been going towards 2%, the higher than expected unemployment rate readings in the past 5 months have presented a mixed message for the markets.
With wage growth and job creation in the spotlight, markets will be gauging how resilient the economy truly is. Any surprises could spark USD volatility, as traders adjust to what this means for the Fed’s policy outlook.
Upcoming US Economic Data Today
| Time (GMT) | Currency | Event | Forecast |
|---|---|---|---|
| 12:30 PM | USD | Average Hourly Earnings (m/m) | 0.3% |
| 12:30 PM | USD | Non-Farm Employment Change | 147K |
| 12:30 PM | USD | Unemployment Rate | 4.2% |
Average Hourly Earnings (m/m) (UTC 12:30 PM)
Wage growth remains a critical, leading indicator for inflation. The more wages people have, the more expendable income they have which incentivises spending – lowering the value of the US Dollar and adding inflationary pressure.
Traders and investors will be watching for the following factors:
- If wages are growing faster than anticipated (0.3%), then it suggests inflationary pressure. This will give DXY strength.
- If wages are lower than 0.3%, it suggests the markets are cooling off and the Federal Reserve could be prompted to cut rates faster.
| Expectations / Forecast: 0.3% | Previous: 0.4% |
Non-Farm Employment Change (UTC 12:30 PM)
Non-Farm Employment Change is one of the key indicators for gauging the strength of the U.S. labour market. Forecasted at 147K, this data reflects how many new jobs are added to the economy, excluding the farming sector. Higher job creation usually signals a strengthening economy, while lower-than-expected numbers might suggest a slowdown.
Traders and investors will be focusing on:
- If jobs fall short, it may indicate economic cooling, increasing chances of a dovish Fed.
- If jobs exceed 147K, it points to a stronger economy, likely boosting the USD.
| Expectations / Forecast: 147K | Previous: 142K |
Unemployment Rate (UTC 12:30 PM)
The Unemployment Rate is a critical gauge of the U.S. economy’s health. Forecasted to hold at 4.2%, a stable rate suggests a balanced labour market. However, any deviation could signal economic shifts.
Traders and investors will be watching for the following factors:
- If unemployment drops below 4.2%, it may suggest a tightening labour market, which could fuel inflation concerns.
- If unemployment rises above 4.2%, it could signal a slowdown, increasing the likelihood of a dovish response from the Fed.
| Expectations / Forecast: 4.2% | Previous: 4.2% |
Outlook for the Fed’s Path
The data today will offer vital clues about the Fed’s next move. If wage growth and job creation exceed forecasts, expect the USD to strengthen on higher rate hike expectations. Conversely, softer data could hint at cooling inflation, leading to speculation that the Fed may ease up on its aggressive tightening.
You may also be interested in:
SP500 Elliott Wave: Stocks Slip, But the Bull Won’t Trip
Markets Eye Jobless Claims, ISM Services, and Middle East Tensions
