October 2, 2020

Special Report: The U.S NFP Data

Special Report: The U.S NFP Data

Today is the most important day of the month for the U.S. stock market. It is today that we will hear more about the health of the U.S. economy. I am speaking about the U.S. Non-Farm payroll data, which is also known as the mother of all economic numbers. 

When Is the U.S. NFP Due?

The U.S NFP data is due at 1:30 PM BST, and the forecast is for 900K against the previous reading of 137K. So far, the U.S. NFP data has traded in a positive direction, meaning the U.S. economy has recovered more jobs. 

The Big Question 

The question for investors and traders is if we are going to see any improvement in today’s U.S. NFP number, and more importantly, how is it going to impact the U.S. stock market, the dollar index, and the commodities? 

Prediction 

It is also difficult to predict the exact U.S. NFP number; however, there are always signs indicating if we are going to get a more positive number or whether the data will be underwhelming. In addition to this, there is also an element of surprise which can move the markets. 

Momentum Is Slowing 

Looking at the high-frequency economic numbers, your day-to-day numbers, it is quite clear that the U.S economy has lost its mojo. The U.S. weekly Jobless Claims data has started to print much weaker numbers. Even this week, if we have learned anything, it is this; fewer Americans were able to find jobs. 

Stimulus Package and US NFP

Every single day we hear news about companies firing their employees in order to cut their costs. There was a hope that we would see another stimulus package in time so that the economic recovery could remain on track. However, the prospects of another stimulus package seeing the light of day are still very slim. The news of the U.S. president catching the coronavirus has lowered the odds for the second stimulus aid coming out in time. This means that U.S. companies will continue to suffer, and they will continue to lay off workers. 

Hope For Recovery 

However, there is some hope for recovery, and we have seen the evidence of this in the U.S ADP Non-Farm Employment number. The data came in at 749K, against the forecast of 650K. It confirmed that the U.S. economy created more jobs over the past month. This notion falls very much in line with today’s U.S. unemployment rate, which is expected to fall further. The forecast is for 8.2% while the previous reading was at 8.4%. 

Where is the Opportunity?

If the U.S. NFP number comes in strong today and confirms that the U.S economic recovery is still very much intact, the policymakers will find a lot of comfort in that news. This means the stock market may move higher, although investors are highly concerned about Trump catching the coronavirus. The gold price may give up some gains, but again, this may not trigger a full-blown sell-off for the gold price, as investors will likely hedge their risk given the massive uncertainty around the U.S. presidential election.