US Employment Report - Sep | Prior (Feb.) | Expected | Status |
NFP | 313K | 188-193K | Jan. reading revised up to 239K |
Unemployment Rate | 4.1% | 4.0% | Lowest levels over 17 years |
Average Earning MM | 0.1% monthly 2.6% yearly | 0.3% monthly 2.7% yearly | Wages growth pushing inflation to FED target at 2% |
The following are the most important data that may have a direct or indirect impact on the readings to be released today:
- The ISM manufacturing index registered a slowdown in March to 59.3 points, but the manufacturing sector continues to grow for the 19th month in a row. The index's employment component continued to grow for the 18th month in a row despite slowing in March. (positive)
- Non-Manufacturing ISM registered a lower than expected reading of 58.8 points in March, but the non-manufacturing sector showing growth for 98 consecutive months, while the employment component of the sector grew for the 49th month in a row. (positive)
- The private sector employment index added 241,000 jobs in March, the fifth consecutive month, adding jobs higher than 200K and the fourth consecutive month, adding more than 240,000 jobs. (positive)
- The Non-Farm payroll (NFP) usually adds jobs in April each year over the last 8 years, averaging 212K jobs since 2010. (Positive)
- The average of four weeks of weekly unemployment benefits rose to 228 thousand people.
| 2017 | 2016 | 2015 | 2014 | 2013 | 2012 | 2011 | 2010 | Average |
Mar. | 211K | 160K | 223K | 288K | 165K | 115K | 244K | 290K | 212K |
Feb. | 235K | 242K | 295K | 175K | 236K | 227K | 192K | -36K | 195.8K |
Expected scenarios:
Scenario 1 (Expected)
If the reading of the index came within the range of expectations from 180 to 200 thousand jobs in March, with stable in unemployment rates and improved wages.
- This scenario will support the US Dollar and keep it rising
- EURUSD is expected to see a drop to support level at 1.2190 / 1.22
- Gold prices to decline to the support level at 1316 dollars.
- USDJPY may be heading directly to 108 levels and approaching the 109 levels.
Scenario 2
The index added a better reading than the current forecast of 240,000 jobs or more, as well as improving in wages and stabilizing in unemployment rates at current levels
- This will support the USD strongly and push it higher against its rivals
- EURUSD is expected to exceed support levels at 1.2190 and may be heading towards the next support level at 1.2090.
- Gold will drop strongly, and we may see it at support levels of $ 1306. The USDJPY could rise to 110/111 levels.
Scenario 3
It is the most pessimistic scenario that March readings will come below expectations or below 100K levels
- That would be a more negative scenario for the US dollar and would push it down significantly against its rivals
- EURUSD may rise to reach 1.2280 / 1.23 levels.
- Gold to rise above $ 1330 per ounce.
- The USDJPY may be retreating significantly, returning to 105/10 levels.
Equiti Research Team:
We are more inclined to the first scenario, which suggests that the economy will add jobs within the range of 180 to 200 thousand jobs, that unemployment will stabilize near 17-year lows, and that the wages will rise to 0.3 percent. Those data would keep momentum for the US dollar which t gained during the past few days.
Attention will be paid to wage rates and if it approached 3% levels it will be very positive and will help inflation to rise towards the Fed's target of 2%. Therefore, it will help US dollar strongly, and we could see acceleration in the path of tightening policy. While the continued slowdown in wages will be significantly negative for the dollar.
