Date: 06 Sep 2019

The Non-farm payrolls job report is expected to show that the pace of U.S job creation slowed for a second consecutive month in August. Most economists are predicting that the American economy added 150,000 new jobs last month, which is marginally weaker than the 164,000 created during the month of July.

Should the headline number come in-line with consensus forecast it will be seen as a positive by investors, as it would strongly indicate that the economic activity in the United States still remains fairly robust. Furthermore, a headline number of 150,000 would be above the Non-farm payrolls median monthly average, of 125,800.

Financial markets will also start to price-in the possibility that the Federal Reserve is unlikely to enforce a dramatic interest rate cut above 25 basis points on September 18th if job creation and consumer spending remain strong.

Recent macroeconomic data has also shown that United States economic activity is not dropping-off-a-cliff, such as yesterday’s factory orders data, as some analysts have feared, although the American manufacturing sector is starting to show notable cracks.

The wage growth component inside the August U.S job report is expected to have ticked-down slightly, as inflation pressures remain muted and a number of key U.S sectors freeze pay increases, as they observe the potential impacts of the newly imposed trade tariffs on the U.S and Chinese economies.

The key takeaway from Friday’s report will be the overall market reaction to the headline jobs number. A monthly jobs number that is broadly in-line with market consensus is likely to reinforce the notion that all is well with the United States economy. An unexpected increase in the U.S unemployment rate or a significant miss on the headline number has the potential to push the U.S Dollar lower and dampen market sentiment.

 

 USD/CHF Daily Candlestick Chart | Source: ActivTrader

USD/CHF Daily Candlestick Chart | Source: ActivTrader

 

The U.S Dollar index is in the midst of a major technical correction after it recently moved to a fresh 2019 high and touched levels not seen since May 2017. The U.S Dollar is now moving lower against the Swiss franc, although it has yet to break any significant downside support levels. Key upcoming resistance is found at the 0.9880 and 0.9910 levels, while key support is located at the 0.9800 and 0.9720 levels.

 

Written by Nathan Batchelor, External Analyst, ActivTrades

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