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Market Insights

The Skilling NFP Preview - September 2022

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US jobs in focus

The U.S. nonfarm payrolls are forecasted to show that between 300,000 - 310,000 new jobs were created during August. If this is the case then August would have created fewer jobs than the 528,000 new jobs that were created during July. Since inflation is an ongoing concern, any signals that the US jobs market is “cooling” may be deemed as “good” news for certain parts of the financial markets.

However, even if the jobs data, including the headline non-farm payrolls (NFP), average hourly earnings, average work week and the unemployment rate indicate a slowing labour market conditions, the more important consumer price index (CPI) data comes out on September 13th.

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Watch wages and job openings for deeper insight on the US employment situation

The recent trend in US wage growth has been strongly implying that the jobs market remains tight; a tight labour market tends to add to increasing employee wages.

Although the average hourly wages are expected to decrease from 0.5% to between 0.3% -0.4% month on month, traders and investors cannot rule out any potential upside surprises in the hourly wages, which in this case may increase the odds that the September 13th CPI inflation data could come in hotter than what analysts or even the US FED may be expecting.

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US Jobs Openings and Labor Turnover (JOLTs)

The latest JOLTs report indicates that US job openings unexpectedly advanced higher in July!

On the last business day of July, the number and rate of job openings were changed at 11.2 million versus previous 11.04 million while forecasts were calling for a 10.5 million number.

US Job openings for July increased in transportation, warehousing and utilities (+81,000); arts, entertainment and recreation (+53,000); federal government (+47,000); and state and local government education (+42,000). Job openings decreased in durable goods manufacturing
(-47,000).

The JOLTs report often can be used by traders and investors to get a “heads-up” upcoming payroll data.

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The JOLTs report often can be used by traders and investors to get a “heads-up” upcoming payroll data.


The August Non-Farm Payrolls (NFP) is due on Friday September 2nd, 2022

Graph 1

Will US unemployment remain at 3.5%?

Graph 2

How will the August Jobs data affect the USD?

As the USD trends higher

Commentary:

As the USD trends higher, gold prices remain in a downtrend, and although gold prices seem to have found some short term price support near $1,681 (13-week low), the broader market theme of a stronger USD on the back of higher US interest rate prospects could continue to dominate the USD / gold trade for some time.

However, if the jobs and inflation data continues to come in “hot”, then inflation risk may increase even further. This may support the potential case for both USD and gold prices to sync and perhaps move higher together, at least for a period of time, instead of the typical inverse relationship traders and investors tend to have historically relied on when trading the USD against gold.

NFP Day Asset Focus

NFP Day Asset Focus

The above table measures the asset percentage performance during the previous 30 days.

Not investment advice. Past performance does not guarantee or predict future performance.

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