Financial markets are awaiting during the American session today, Friday, December 3, the last session of the week, the NFP data from the US Department of Labor in the November reading, as it is considered one of the most important data that the US Federal Reserve looks at before making any decision in monetary policy, and therefore the importance of data Today, since it comes less than two days after US Federal Reserve Chairman Jerome Powell announced that he will consider accelerating the process of decreasing the pace of bond purchases next week in mid-December, and therefore any surprising data today from the labor market may play a role in the Fed’s decision in its mid-month meeting.
Market expectations for employment data today are to add between 550-560 thousand jobs in November, compared to 531 thousand jobs added by the US economy in October, with expectations of a decline in unemployment rates to 4.5% from 4.6% and the stability of the wage rate at October levels at 0.4% on a monthly basis At 5% on an annual basis.
All indicators support a good jobs report in November, as weekly unemployment claims rose less than expected in the last week, and the 4-week moving average fell to its lowest level since March 2020 to about 239 thousand, in addition to adding the American private sector ADP about 534 thousand jobs, and the employment index rose In the ISM Manufacturing PMI to 53.3, but all these numbers and since they indicate positive numbers that we may witness in November, do not mean a confirmation of that, as the data and its evaluation have become volatile in light of the Corona situation, and therefore we do not rule out sudden bad numbers.
Expected scenarios of movement
Positive data matching expectations or better than expectations from the US Department of Labor will enhance and support the US Federal Reserve’s plans by considering a plan to accelerate the pace of reducing bond purchases and thus raising markets expectations of raising US interest rates, perhaps in the first quarter of next year, thus supporting the rises of the US dollar, and the Japanese yen and the euro currencies will be hurt the most.
And vice versa, if the data comes with a negative surprise, the dollar will rebound and decline temporarily, but until it interprets the numbers and analyzes them, are the numbers so negative that the Fed changes its opinion at its next meeting, or are they only temporary weak numbers and will benefit the most commodity currencies and the pound sterling.
In addition to the US economic data, employment data from the Canadian labor market is also expected to be released at the same time, as the Canadian labor market is expected to continue improving and add about 36 thousand jobs in November and the unemployment rate to decline to 6.6%.
The US dollar is trading at 96.26 levels, up by 0.15%, with the opening of the European session, with positive expectations for employment data rising.
05/11/2024
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