Market Watch: US Nonfarm Payrolls Data

Later today at 16:30 pm Dubai time, US jobs data is set for release, and the markets are waiting to see how the real reading will turn out compared to what is expected and to the previous reading. Expectations indicate that the US economy added around 178,000 jobs during October 2023, compared to the previous reading of 336,000 jobs.




Labor Market Data, US Department of Labor



One obvious trend is that job rates recently stabilized at a resistance line that has been extending for around 3 years, despite exceeding a resistance near 300,000 jobs. This gives unique importance to today's report to determine whether jobs creation will exceed the extension of the resistance line or whether they will return below the previous resistance level at 300,000.


In other words, if the reading is lower than the previous reading and less than expected, this would indicate a slowdown in the labor market as a result of continuous interest rate hikes. Whereas if the reading is better than the previous, this would indicate continued positive momentum for employment.


The jobs report is considered crucial in determining expectations for the pace of interest rate hikes and final interest rates during the upcoming FOMC meetings. Therefore, expectations for the report are as follows.





Traders should also consider the following important points.


  • If the employment reading is higher than 336,000 jobs, this would mean a very strong labor market and its impact could be significant on the markets.


  • The Fed fears any hasty cooling in interest rates as this may lead to inflation becoming entrenched in the economy.


  • The final interest rate necessary for inflation to reach 2% is still unclear.


  • There are no clear signs indicating a sustainable decline in inflation rates.



In general, analysts expect the data release to come with additional volatility in the financial markets, given that the Fed relies on this data before making any change in interest rates.


Traders should remember that the initial market reaction, regardless of the nature of the actual reading, may be sharp and volatile before the market begins to return to stability. Remember that traders have different ideas and convictions in the way they interpret the information issued, and therefore prices cannot move 100% based on that information.





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