Trading Insights: US payrolls growth expected to be “softest” since December 2020

Market Talk

Good news? US unemployment rate expected to increase

Chart 2 Source: Tradingview May 05 2023 6:19 UTC

The above chart illustrates the 12 month trend for US Job Openings and Labor Turnover Survey (JOLTs)

• JOLTs data (see chart 1) printed a lower number for the second month in a row
• The JOLTs data can be an indicator for forecasting future US employment trends
• It could be “good” news for stock markets if today’s NFP indicates that less than 200,000 jobs were created in April, since a weaker US jobs report may support the Fed's rate pause

Employment situation in manufacturing and services sector

• Services employment moved slightly lower recently
• Manufacturing moved slightly higher recently

The economy and prospects for a “slowing” US jobs market

• US jobs market remains solid, even if the jobs market weakens by 2% or 3% over the medium term, the economy can handle higher unemployment

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Today’s economic calendar

Friday May 05 12:30 UTC: US Nonfarm payrolls (NFP)

• Forecast to be the “softest” since 2020
• Prospects for an increased market reaction if the forecast is proven correct
• Potential for the unemployment rate to move slightly higher

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Today’s trading bullets

SPX500 Index prospects for a move higher within the very short term (1-13 days)

• SPX500 Index (30 min chart) current price $4,071 is above its 9 and 18 hour moving averages (bullish), MACD is above its signal line (bullish), relative strength above 50 (bullish), downside risk spotted near $3,953 (38.2% retracement from its 13 week low), key resistance at $4,133 which if price can clear above opens the prospects for an advance towards $4,350 in the very short term (1-13 days).

• EUR/USD current price 1.1036 with 1.1130 in sight provided key resistance at 1.1095 can be overcome. Downside risk for the EUR/USD below 1.9040 could trigger a trend reversal.