The market expects data on the US labor market. The forecast is positive

At the beginning of this trading week, expectations for the labor market report were moderately positive. The median of the NFP forecast was just 50,000. By Thursday, it increased to 100,000. The rise in expectations is based on data from the Institute for Supply Management (ISM). Manufacturing employment has increased to 52.6, the highest level since June 2019.

The most important report from the ISM for the services sector showed even more encouraging numbers. Employment grew at the fastest pace in 11 months and reached 55.2 after the December contraction.

Unemployment

Unpredictable consequences of the pandemic make economists disagree in what they think the US National Bureau of Labor Statistics data will be. TD Securities (SA) and Wrightson ICAP LLC expect significant NFP growth to 400,000. On the other hand, Barclays Capital Inc. and Credit Suisse (SA) forecast a 100,000 decline in employment. Some economists are expecting a 250,000 contraction.

The average forecast is a 100,000 increase. Expectations of positive data are supported not only by the ISM indices but also by other important indicators. The ADP has published its report showing the 174,000 growth, 125,000 more than expected. The total number of people receiving unemployment benefits fell by 108,000 to 4.592 million.

Let’s consider the current technical news in the dollar index.
  • Support levels: 90.44, 90.02
  • Resistance levels: 92.77, 93.18

Due to the positive statistics, the dollar index is growing. The chart shows a stable correction on the H4 and the H1 timeframes. The USDX has consolidated above the moving averages. The ADX shows a significant increase in trend potential. In the case of positive data release (higher than expected), the index may continue to rise to the first and second resistance levels, since the ADX is still far from the overvalued area.

Unemployment

by Justforex, 2021.02.04

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

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