2023-11-03 09:50:00
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Investing.com – The markets are awaiting the release of data for the month of October, today, Friday, at 15:30 Saudi time, which is expected to have a strong impact on the movements of the US and gold, in addition to its expected strong impact on the stock markets and the future.
This month, US employers are expected to ease the pace of hiring following increasing salaries at the largest rate since the beginning of this year, which is in line with the strong labor market that supports the economic expansion.
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Expectations indicate that government data will show that the number of jobs in the world’s largest economy increased by regarding 180,000 jobs in October, a strong growth that comes following significant progress in the previous three months.
Hourly wages are also expected to rise at the slowest annual pace in more than two years, reflecting some increased labor force participation. These moderate wage gains help explain why the Federal Reserve kept interest rates unchanged once more during their meeting this week.
The flexible labor market has played an effective role in maintaining consumer spending and promoting economic growth as inflationary pressures gradually ease. Continued hiring is one of the factors making economists more optimistic regarding economic prospects, as the odds of a recession have declined since June.
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Meanwhile, Bloomberg Economics analysts believe that wage growth represents an accurate signal of labor market conditions. There will likely be a slowdown in average hourly wages.
This trend should give the Fed a cover to keep interest rates in the event of a pause. But if these indicators reveal a rapid deterioration in underlying labor market conditions, this might raise new concerns for monetary policy makers.
Here is a look at the expected data and how it affects dollar and gold trading.
Labor market data released this week
In recent days, conflicting economic data have been issued regarding the labor market, indicating that the US economy is heading toward recession and slowdown at times, and other data indicating that the economy is still in good health. The scenario of an economic slowdown supports a rise in gold on the one hand and a decline in the dollar on the other hand, because the recession will push the Federal Reserve to end the cycle of tightening monetary policy at current levels. The opposite is true in the other scenario in which the economy is strong, and thus this supports the rise of the dollar once morest gold.
Markets widely expect a slowdown in the pace of job addition today, as it is expected that 180,000 jobs will be added in the private sector, compared to 336,000 jobs in the previous reading. Therefore, if the data comes in accordance with these expectations, gold is expected to rise and the dollar to decline.
Ten-year yields have fallen from the 16-year peak, as has the US dollar, as they are heading for weekly losses.
In terms of labor market data, the US Department of Labor’s report yesterday revealed that it recorded 217,000 applications, while expectations indicated that 210,000 applications were recorded. However, it recorded 212 thousand readings last week following adjusting the reading.
The average number of unemployment claims in the past four weeks (which is the most accurate standard for measuring labor market performance) accelerated to 210,000 applications, from the previous week’s revised average of 208,000 applications.
At the same time, a report revealed that the economy added only 113,000 jobs in October, while experts expected the addition of 150,000 jobs. While the September reading recorded 89 thousand requests.
However, he reported that the American economy created approximately 9.553 million job opportunities, while experts expected 9.250 million job opportunities to be created in September. The previous reading was revised to 9.497 million opportunities.
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Key employment data scenarios
Market expectations indicate that higher interest rates will negatively impact the upcoming US employment data. According to expectations, the US economy is likely to add regarding 180,000 jobs. Expectations also indicate that wages will grow by 0.3% on a monthly basis, in addition to the unemployment rate remaining stable at 3.8%.
The scenarios for US employment market data are: positive data, which is the first scenario, and better than expectations, as the economy adds many jobs, unemployment decreases less than the expected percentage and less than the previous reading, and wages grow at a very strong pace, and this positive scenario for labor market data may It provides strong support for the dollar index above the level of 106 points and towards the level of 107 points, because this scenario will give the US Federal Reserve greater flexibility with regard to continuing the tight monetary policy, and on the contrary, it will be harmed on the other hand.
While the second scenario is that the US employment data is negative, that the economy adds jobs less than expected, and that unemployment rises higher than expected, and as such, the dollar may continue its declines below the level of 106 points, because this scenario will stimulate the Federal Reserve to end the cycle of monetary tightening, and this will be It has a negative impact on the dollar and a positive impact on gold. This scenario is expected to push above the $2,000 per ounce level.
Matt Simpson, chief analyst at City Index, said the jobs report needed to deliver some noticeably weak numbers to put further pressure on returns, which would push gold prices above $2,000 an ounce.
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