US NFP, Unemployment Rate and Average Hourly Earnings data will be released later this afternoon (1:30pm BST). Watch my weekly Forex news event’s overview here or read my full analysis in order to learn about interpreting these particular data points.
Average Hourly Earnings:
The US NFP (Non-Farm Employment) report is the most market moving number to be released from the US and shows the change in the number of employed people during the previous month, excluding the farming industry. Job creation is a leading indicator of consumer spending which accounts for a majority of overall economic activity. The Unemployment Rate measures the percentage of the total work force that is unemployed and actively seeking employment during the previous month. Then finally the Average Hourly Earnings measures the change in the price businesses pay for labor, excluding the farming industry, which is a leading indicator of consumer inflation.
The US Dollar is currently bullish with one of the strongest influences behind the strength being investors anticipation of a coming rate hike from the FED in 2015. The employment situation has not been strong but has been strong enough to keep up expectations for a rate hike later this year. The report for August is expected to show an small uptick with nonfarm payrolls expected to rise 217,000 vs 215,000 in July. The unemployment rate is expected to tick 1 tenth lower to an ever tighter 5.2% while average hourly earnings are expected to remain tame, at plus 0.2%.
Expected Market Reaction:
This is the most marketing moving data to be released from the US and with the pending rate hike fresh in traders minds, along with the FED’s current data dependent stance, we don’t expect it to disappoint in terms of volatility. A positive number will likely see a good deal of USD strength by bringing back the possibility of a September hike, while a negative number will likely pressure the USD and cement the fate of a September liftoff.
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