JULY NON FARM PAYROLLS REPORT
On Friday morning, the U.S. Bureau of Labor Statistics will release its report on July non farm payrolls (NFP). Wall Street surveys predict that U.S. employers hired 200,000 workers last month, following the addition of 209,000 jobs in June. The jobless rate is expected to remain steady at 3.6%, indicating that the labor market is still very tight.
Over the past year, economists have consistently underestimated employment gains, suggesting that NFP figures could once again surprise to the upside. This is especially true since initial jobless claims have decreased recently – a sign of fewer layoffs.
The strength or weakness of the report in relation to consensus estimates will greatly impact the U.S. dollar, gold, and the S&P 500, ultimately shaping their short-term trajectory. Therefore, traders should closely monitor the economic calendar in the coming days to make more informed investment and trading decisions.
At their recent meeting, the Federal Reserve made it clear that they will base their decisions on current data. This approach allows for flexibility and could prevent further policy tightening in 2023. However, changes in economic conditions could lead to a reassessment of the current tightening cycle.
If job and earnings growth exceed expectations, interest rates may increase, which could be good for the U.S. dollar, but bad for gold and the S&P 500. A figure above 300,000 in NFP (Non-Farm Payrolls) could make this scenario more likely.
On the other hand, weak employment gains, such as job figures below 150,000, could result in the opposite scenario. This could cause concern about the state of the economy, weigh on yields, and prompt the Fed to reevaluate their tightening campaign. As a result, the U.S. dollar may decrease, while the S&P 500 and gold prices may increase.
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