Jerome Powell was named by President Donald Trump as his nominee to serve as the next chair of the Federal Reserve, as he moved to make his mark on the world’s most powerful central bank.
The news ends months of speculation ahead of the end of Janet Yellen’s first term as chair in February. The post of Fed chair is subject to Senate confirmation.
Yet, the US Dollar declined slightly right after the announcement. However, it managed to recover since the beginning of the day. However, the big news is yet ahead of us.
The US Jobs Report will be released in an hour or so, which is expected to have a notable impact on the markets.
Expectations
The estimates points to a notable increase in NFP with more than 300K new jobs, after loosing around 70K jobs in September due to the historic hurricanes.
Moreover, the Unemployment Rate is expected to remain stable at 4.2%, which is the lowest level since the financial crisis.
Furthermore, the Average Hourly Wages is expected to show an increase of 0.2% in October after the notable increase in September which increased by 0.5%.
What Do You Need To Keep An Eye on
Today’s report doesn’t need a rocket scientist to estimate a huge beat and probably much higher than the market estimates. Last month’s decline was just a temporary loss of jobs due to the unusual weather.
However, traders should keep an eye on the average wages, which matters the most for the Federal Reserve at least until the end of this year and right before December meeting.
A disappointment in Average Wages means that the recent rise in inflation might be temporary. Moreover, keep an eye on the previous figures and whether they are revised or no.
Forget about the unemployment rate as its driven by the participation rate, and also forget about the NFP figures, unless they come in with a disappointment.
USD Reaction
As mentioned in our previous reports, the US Dollar Bullish outlook is still intact at least from a technical analysis point of view, as the index has formed and confirmed a bullish head and shoulders on the daily chart.
The index has been trading within a tight range since the beginning of the week, while a fundamental catalyst is still needed, which might come from today’s Jobs Report.
If the wages growth for the month of October showed a notable increase, and last month’s data remained stable. This might be the catalyst that the US Dollar is looking for.
By then, 95.0 and 95.50 might be the next stop. Otherwise, a disappointing wages data might put another pressure on the index back to 94.14 and/or 94.0 support area.
Edited by:
Nour Eldeen Al-Hammoury
Market Analyst
