Analysts forecast only 181K new jobs

BY Janne Muta

|May 5, 2023

Analysts expect to see only 181K new jobs (previous 236K). With the Fed signalling it is likely to stay on the sidelines for the foreseeable future, only a very significant deviation from the expected number is likely to provide us with a strong market reaction. If the number comes in relatively close to the expectation we are likely to see the current trends continuing. However, to get a better understanding on the current trends in the US economy let’s take a look at what the recent employment-related data looks like.

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The recent ADP report indicates strong job creation in the private sector, and the ISM Services PMI has shown continuous growth in the services sector. The relatively stable hires and total separations in the JOLTS report, along with the modest increase in jobless claims, suggest an overall stable job market. These factors contribute to a positive outlook for the US economy, as a robust job market generally drives consumer spending and overall economic growth.

On the other hand, there are signs of headwinds that could impact the economy negatively. The slowing wage growth and the decline in job openings, as reported by the JOLTS report, could contribute to reduced consumer purchasing power and dampened consumer spending. The decelerated employment growth in the ISM Services PMI report is another factor that could weigh on economic growth.

Additionally, the concerns expressed by respondents in the ISM Services PMI report about inflation and a potential economic slowdown suggest a level of uncertainty in the business environment. This uncertainty could lead to reduced investment and hiring activities, further affecting economic growth.

Taking all these factors into account, the US economy is likely to experience mixed growth, with a robust job market and expanding services sector counterbalanced by wage stagnation, decreasing job openings, and inflationary pressures. Over the long run, the Federal Reserve's interest rate decisions will also play a crucial role in shaping the economic outlook, as any further increases may exacerbate the headwinds and potentially slow down growth.

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DJ is trending lower in the 4h chart. Below the 33 472 resistance level, the market is likely to test yesterday’s low again. Above 33 472 a move to 33 590 looks likely.

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EURUSD is bullish above 1.0942. Below the level, the market probably moves to 1.0905 or so and if there’s no quick recovery above the 1.0942 threshold level we might see a move to 1.0850.

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USOIL is bullish above 63.80 and could trade to 71.20 and then perhaps to 72.50 on extension. If the market breaks support levels and eventually trades below yesterday’s low we might well see a move to 61.80 or so. Other key price levels to focus on are 67.45, 69 and 69.74.

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USDCAD is bearish below 1.3522 and might well trade down to 1.3450. The lower swing high created a couple of days ago together with the consequent breaking of a neckline (at 1.3522) indicate weakness. Above the neckline, the market could trade up to 1.3575.

The Next Main Risk Events

  • CAD Employment Change
  • CAD Unemployment Rate
  • USD Average Hourly Earnings
  • USD Non-Farm Employment Change
  • USD Unemployment Rate

For more information and details see the TIOmarkets economic calendar.

Trade Safe!

Janne Muta
Chief Market Analyst

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Janne Muta

Janne Muta holds an M.Sc in finance and has over 20 years experience in analysing and trading the financial markets.

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