Today, markets are in for a rocky ride as the latest US nonfarm payrolls report is set to be released. This report arrives at a time when many traders are already absent for the Good Friday holiday, and resulting lack of liquidity in the market could further amplify any reaction the report elicits.
Economists are expecting an addition of 239,000 jobs in March, and the unemployment rate is projected to stay at a decades-low 3.6%. Wage growth is expected to slow from the previous month, but the levels of stagnation are unlikely to be substantial. Early labor market indicators have left analysts with a mixed outlook on what could potentially be in store for today’s figures.
The US ISM surveys have presented a gloomy picture of the labor market, having decelerated its growth. This is coupled with an increase in unemployment benefits applications. However, S&P Global surveys showed a different picture – the highest job creation pace in six months, as was as an intensification of wage pressures.
In a market that is pricing the possibility of a Fed rate cut by the end of 2019, the nonfarm payrolls report could be named the deciding factor in the dollar’s future as it moves forward. The possibility of higher returns due to a weakened dollar are drawing investors to the US currency.
Since most US markets will be closed today, FX will remain the only game in town, with the shortage of liquidity making any potential result in the dollar even more vicious than it would be otherwise. Despite the weakening of US labor market, the reserve currency of America remains supported by the lack of a safe-haven alternative.
The greenback’s weakness hasn’t been enough to quell the surge in gold prices that began earlier this week, however. Prices have been soaring and reaching beyond US$2000, with the Chinese central bank topping it all off by continuing to increase its gold reserves every single month since March 2019.
Equity on Wall Street had also made a comeback yesterday as initial jobless claims pointed to a labor market that has begun to cool, leaving the Fed no choice but to contemplate a pivot. Markets will remain closed again today and irrespective of the nonfarm payroll report’s results, the stocks are expected to open with a certain level of gap on Monday.
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Jeffrey Eischeid is an award-winning journalist and political analyst associated with Investing.com. He brings with him nearly two decades of experience in the financial field and has been writing about politics since 2011. Jeffrey has been featured in Time, The Washington Post, Foreign Policy, Businessweek, Fortune, The New York Times, The Atlantic, and was even selected as a “Washington Experts” by Politico Magazine.