NFP Report: How Strong Is The US Labor Market?

On Friday 7th?July 2023, the markets are looking forward to US jobs data. Expectations indicate that the US economy added 224,000 jobs during June, compared to 339,000 in the previous reading. The unemployment rate is expected to decline to 3.6%, and for the wage rate to decline slightly on a monthly basis to 0.3%.

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The jobs report is considered crucial in determining expectations for the pace of raising interest rates, so this data is expected to affect market prices, given that this data and inflation data directly correlates to the Fed’s policy decisions.

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As per analysts, the expectations are as followed:

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A reading higher than expected and higher than the previous

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This indicates that the labor market is strong, which may push the Federal Reserve toward more monetary tightening. According to analysts, this may be positive for the dollar and negative for gold and stocks, noting that the last 9 readings of the jobs data were above expectations.

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A reading within or less than expected

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This indicates that the labor market has started to suffer as a result of the Fed’s monetary tightening policy. This may prompt the Fed to continue to pause interest rates, which may be negative for the dollar and positive for gold and stocks.

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In the event that the reading comes in between the previous reading and the expected reading, this would be the most confusing reading, and markets would expect to witness fluctuations in the price movement.

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Traders should remember that the initial market reaction, regardless of the nature of the real reading, may be sharp and volatile in the beginning before the market returns to stability. Therefore it is necessary to remember that traders have different ideas and convictions in the way they interpret the information issued, and therefore it cannot be prices move 100% according to that information.

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The content published above has been prepared by CFI for informational purposes only and should not be considered as investment advice.?Any view expressed does not constitute a personal recommendation or solicitation to buy or sell.?The information provided does not have regard to the specific investment objectives, financial situation, and needs of any specific person who may receive it, and is not held out as independent investment research and may have been acted upon by persons connected with CFI.?Market data is derived from independent sources believed to be reliable, however, CFI makes no guarantee of its accuracy or completeness, and accepts no responsibility for any consequence of its use by recipients.