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    US labor market takes spotlight

    The US labor market is going to be in the spotlight this week. The most significant event – employment report for the month of July, released by the Department of Labor, is scheduled for Friday (August 7). This report always gets increased attention from the markets, and now, after last week’s Fed meeting, the interest in it has become even bigger. And no wonder, after all, the US central bank announced that to make a final decision on increasing rates it would like to see “some more” improvement in the labor market.

    Investors have been preparing for Friday since the beginning of the week. Fortunately, there are intermediate data that can be used in attempt to predict what will be the key report like. So tomorrow, we expect ADP national employment report on private sector in July. Over the previous two months, May and June, it registered accelerated rates of new jobs. From a technical point of view, this growth looks like the recovering from the uptrend line of 2010-2015, to which the indicator declined in April (see Chart 1). If on Wednesday the ADP report shows further growth, we’ll be anticipating a moderate strengthening of the US dollar against its major counterparts amid increasing hopes for a strong report Friday.

    1

    However, employment data – is not the only information that markets are expecting to be released by the US Department of Labor. Perhaps even more important will be the data on wage growth, that is, the price pressure data on the salary level. Going back to the last Fed’s meeting, it is worth noting that the FOMC members in their accompanying statement complained that inflation in the United States didn’t show as successful recovery, as the labor market, and this prevents the central bank from beginning monetary policy tightening cycle.

    Gloomy FOMC estimates were then followed by the clear confirmation – quarterly labor costs data, released on Friday July 31. In the second quarter the indicator fell from 0.7% q / q to 0.2% q / q – the lowest in the history of calculation (1982) (see. Chart 2). Let’s hope, that the Department of Labor will at least partially dispel the gloomy impression created by these data.

    2

    Anyways, this week can significantly change market expectations regarding Fed’s further steps.

     

    Dear traders, please post your comments to our forecasts and share your own opinion. Your ideas can be very helpful for the newcomers in the forex market. Thank you!

    The US labor market is going to be in the spotlight this week. The most significant event – employment report for the month of July, released by the Department of Labor, is scheduled for Friday (August 7). This report always gets increased attention from the markets, and now, after last week’s Fed meeting, the interest in it has become even bigger. And no wonder, after all, the US central bank announced that to make a final decision on increasing rates it would like to see “some more” improvement in the labor market.

    Investors have been preparing for Friday since the beginning of the week. Fortunately, there are intermediate data that can be used in attempt to predict what will be the key report like. So tomorrow, we expect ADP national employment report on private sector in July. Over the previous two months, May and June, it registered accelerated rates of new jobs. From a technical point of view, this growth looks like the recovering from the uptrend line of 2010-2015, to which the indicator declined in April (see Chart 1). If on Wednesday the ADP report shows further growth, we’ll be anticipating a moderate strengthening of the US dollar against its major counterparts amid increasing hopes for a strong report Friday.

    1

    However, employment data – is not the only information that markets are expecting to be released by the US Department of Labor. Perhaps even more important will be the data on wage growth, that is, the price pressure data on the salary level. Going back to the last Fed’s meeting, it is worth noting that the FOMC members in their accompanying statement complained that inflation in the United States didn’t show as successful recovery, as the labor market, and this prevents the central bank from beginning monetary policy tightening cycle.

    Gloomy FOMC estimates were then followed by the clear confirmation – quarterly labor costs data, released on Friday July 31. In the second quarter the indicator fell from 0.7% q / q to 0.2% q / q – the lowest in the history of calculation (1982) (see. Chart 2). Let’s hope, that the Department of Labor will at least partially dispel the gloomy impression created by these data.

    2

    Anyways, this week can significantly change market expectations regarding Fed’s further steps.

     

    Dear traders, please post your comments to our forecasts and share your own opinion. Your ideas can be very helpful for the newcomers in the forex market. Thank you!


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