Jobs Week
The labour market has been the key to unlocking a weaker Dollar. Despite moderating inflation and lacklustre economic activity in the US, it had been the labour market that kept the Fed wanting rates held in restrictive territory. As cracks began to appear in the labour market through revisions to prior data and ever softer readings, the Fed began to change its tone. The consensus today is that despite significant adjustment to the price of the Dollar, a Fed fuelled sell-off in the greenback could still have legs.
As a result of the fascination with the US labour backdrop, this week will prove critical to markets. The headline will of course come on Friday, when the September non-farm payrolls statistics will be delivered. The consensus is for just 50,000 jobs to have been added in September according to this statistic. There is a variance amongst forecasts and a weak eventual reading will reinvigorate the Dollar’s decline. Of interest to the Fed will be the unemployment rate, due to be published alongside the payrolls numbers. After coming in slightly above consensus last month, the market expects no change at 4.3% consensus.
It is not just Friday that brings with it expected volatility as a result of financial headlines. Tomorrow sees JOLTs job openings and quits which will serve as an important precursor to later publications. Wednesday’s ADP jobs report will be closely watched before PMIs later that afternoon and Thursday’s jobless claims. This week’s data will largely set the tone for the Fed’s decision due at the end of this month.
Discussion and Analysis by Charles Porter
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