Date: 02 Aug 2019

The United States economy releases the monthly jobs report later today, with most economists predicting that the American economy created 165,000 new jobs during the month of July. The wage growth component inside the July jobs report may be the key to the market’s reaction to the report later today, given that the Federal Reserve are closely monitoring inflation.

A modest 0.2 percent rise in monthly wages is expected during the month of July, which is exactly in-line with June’s wage growth figure. If we continue to see soft U.S wage growth, while employment gains outperform, it will certainly encourage the notion that the Federal Reserve may need to cut interest rates a further 25 basis points this year.

With the U.S Dollar rapidly appreciating against most major currencies it is likely that this trend will continue unless we see a substantial move lower in U.S job creation. Traders will also be mindful that the U.S economy is currently receiving strong capital inflows as other developed economies growth prospects dissipate.

Market participants learned on Wednesday that the Federal Reserve cut interest rates as a preemptive measure to adverse global economic conditions. The central bank has two clear policy mandates; price stability and full employment, with price stability remaining the key concern for U.S policymakers at the moment.

Comparisons are not always conclusive when looking at the U.S private-sector jobs report and the monthly payrolls job report. Although, the fact that the July ADP private-sector jobs report posted a solid 150,000 headline number suggests that the headline number from today’s monthly jobs report is unlikely to come in much worse-than-expected.

 

USD/CHF Daily Candlestick Chart | Source: ActivTrader

USD/CHF Daily Candlestick Chart | Source: ActivTrader

 

The announcement of new trade tariffs is starting to overshadow the July jobs report from the U.S economy, with the USD/CHF pair back under downside pressure after President Trump announced an additional ten percent of trade tariff on the remaining $300 billion of Chinese imports coming into the United States. Key support for the USD/CHF pair is found at the 0.9840 and 0.9780 levels, while upside resistance is found at the 0.9950 and 0.9989 levels.

 

Written by Nathan Batchelor, External Analyst, ActivTrades

*The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and as such is to be considered to be a marketing communication. All information has been prepared by ActivTrades PLC (“AT”). The information does not contain a record of AT’s prices or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of futures performance. AT provides an execution-only service. Consequently, any person acting on the information provided.