US September Non-Farm Payrolls

US September Non-Farm Payrolls

Gold prices fell around 0.5% on Wednesday, halting a rally that started last week and took the yellow metal nearly 6% higher after touching the lowest levels since April 2020. 

The US dollar was the strongest major currency on Wednesday, supported by rising US yields and softer import/export data (which points to a softer global economy). And whilst the prices paid component of the ISM services PMI softened to a 20-month low of 68.8, it remains historically high relative to its long-term average of 59.8 – which suggests the aggressive Fed tightening is yet to make an impact on the inflationary forces of the robust services sector.

The main economic event for the dollar this week is the NFP report. There was some excitement that it may come in soft due to the notable fall in job openings (-9.8%), but ADP employment came in slight above expectations at 208k this week.

September US NFP are forecast at 250K compared to 344K in August. As usual, the prior month could be revised, and also affect market outlook. Since a “normal” NFP is around 200K, any figure above that is likely to support further Fed tightening and weigh on the stock market.

The unemployment rate is expected to remain stable at 3.7%. But, that was also the case last month, when analysts were surprised with an increase in the unemployment rate driven by increased labor force participation. 

With pocketbooks coming under pressure from inflation, it’s not surprising that more people would be out looking for work, which could once again distort the projections.

NFP Release is Friday 7th October at 15.30 GMT+3.

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