FXTM information and reviews
IronFX information and reviews
Libertex information and reviews
FXCC information and reviews
Markets.com information and reviews
FxPro information and reviews
43 916.48

Will Friday's US Jobs number jolt markets back into action?

3 June 2021

This Friday will see the monthly employment numbers out from the US for May. The big question on everyone’s mind is will May make up for the very weak April print. Reuters and Bloomberg consensus estimates are expecting 650k and 700k respectively. This is a crucial jobs number after the April Fed minutes raised the specter of an upcoming discussion about tapering, with the momentum on this topic kept alive by FOMC members like Clarida and Daly. Although the US has its own idiosyncratic conditions for policy normalization, it does seem like what others are doing has maybe affected the psyche of the Fed. Norges Bank (Norway), Bank of Canada, Bank of England and the Royal Bank of New Zealand have all turned relatively hawkish which could be affecting the way the Fed thinks about their own policy. This is a really interesting dynamic as the US has typically led G10 FX nations out of recessions in normalising policy.

This jobs number if strong will make April’s look like a once-off anomaly. It will also be key in shaping the market’s tapering and rate hike expectations ahead of the June 16 FOMC meeting. The market has been rangebound recently, searching for its next catalyst to breathe some life back into a whole host of assets.

The answer to whether this is a vol event is not just if it beats/misses consensus, but the extent too and how the market is positioned. Indicators such as declining initial jobless claims and restaurant reservations surging (more restaurant hires) are encouraging with many offering a belief that the risk, or higher probability outcome, lies in a number north of 700k jobs. I think to move the dial and see a reaction in financial markets we’ll need a print of at least 850k+ as well as an upward revision in April’s number. In this scenario, USD shorts and JPY would struggle. While in equity land I'd be looking at financials to catch a bid, with names like JPM a solid place to be long. Alternatively, a weak jobs print would keep pressure on the USD, and see liquidity beneficiaries, like Gold, Crypto and Tech outperform. Another important data point to keep an eye on besides the headline figure is average hourly earnings which would feed into inflation fears. The next US inflation report is out on June 10.

Bond traders will be wary as a robust NFP print could reignite a move higher in yields. To me the risks for a repricing higher in yields seems asymmetric. A disappointment shouldn’t push yields lower by much, but a solid beat could see quite a big sell-off in bond land. The US 5yr Treasury is my preferred guide on how the market views Fed policy, it is currently oscillating between 75bp (or 0.75%) and 87bp. We can look at this as a guide for the USD – if the yield heads higher I’d be taking a far more constructive view on the USD and vice versa. Real yields also seem to be ticking higher, this event could continue that trend. If equity markets sell-off on higher yields we could also see a mild risk-off bid for the dollar. Lastly, net specs short positioning is also quite sizeable on the greenback. 

Price has breached the $1900 level and has remained above this key level for now. The candles with the long wicks tell me sellers are consistently coming in to push price lower. The RSI momentum indicator is deep in overbought territory and has edged down of late, but has turned up today. If the dollar and real yields continues to move higher we could see a re-test of the 200-day SMA and trend line around $1840/50. Gold has run awfully hard over the past 2 months, we could now see profit taking ramped up. On the upside $1915 looks to be a good first initial target.



Forex and Cryptocurrency Forecast for September 20-24, 2021
Forex and Cryptocurrency Forecast for September 20-24, 2021

The dollar continues to strengthen, and the EUR/USD pair moves south. Starting on Monday September 13 at 1.1810, it ends the five-day run at 1.1730. The movement...

20 Sep 2021

Gold and Silver looking into the abyss
Gold and Silver looking into the abyss

Strong US data revived bets on an imminent QE rollback from the Fed, supporting the dollar and causing bond yields to rise. The news triggered a more than 2% plunge in gold prices...

17 Sep 2021

Stocks pick up some bid after textbook SP 500 bounce
Stocks pick up some bid after textbook SP 500 bounce

European stock markets were modestly higher on Thursday after a rebound in the US and another dip for Asian equities overnight. Hong Kong down 1.7%...

16 Sep 2021

Stock Futures Trade Lower, Investors Worry About Fed Tapering
Stock Futures Trade Lower, Investors Worry About Fed Tapering

US and European futures are trading lower today, following a retracement in US indices. The Dow Jones Industrial Average fell nearly 290 points, wiping out gains...

15 Sep 2021

Futures in the United States and Europe are up today
Futures in the United States and Europe are up today

Futures in the United States and Europe are up today after the Dow managed to gain nearly 260 points and break its five-day losing streak. Although investors...

14 Sep 2021

Forex and Cryptocurrency Forecast for September 13-17, 2021
Forex and Cryptocurrency Forecast for September 13-17, 2021

The ECB meeting on Thursday 09 September went off as expected with no surprises. The interest rate remained unchanged at 0%. The European regulator...

13 Sep 2021

Editors' Picks

OctaFX information and reviews
HotForex information and reviews
XM information and reviews
FXCM information and reviews
Vantage FX information and reviews
Vantage FX
Moneta Markets information and reviews
Moneta Markets

© 2006-2021 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.