In this short note, we preview the upcoming US Jobs Report, the estimates and prospective scenarios. This release is expected to have a significant impact on the markets.

 

Time

 

The US Jobs Report will be released at 12:30 GMT+ which is 16:30 AD time.

 

Related Figures

 

The report includes the Change in Nonfarm Payrolls, Change in Private Payrolls, Change in Manufacturing Payrolls, Unemployment Rate, Labour Force Participation Rate and most importantly the wages growth, including the Average Hourly Earnings on MoM and YoY.

 

Why The Fed Cares

 

The Federal Reserve will be watching this report very carefully because their criteria to raise rates is already accounts for inflation and the unemployment rate.

 

What Matters In Today’s Report

 

The new jobs and unemployment rate figures will not have a notable effect on the markets. The most important figure to look at is wages growth. MoM Average Earnings is set to rise again by 0.2% in March after declining by -0.1% in February. The YoY is likely to remain stable at 2.2%.

 

Potential Scenarios

 

If the new jobs and the unemployment data is positive, and wages growth shows further slow down, the market will consider this a disappointment. This is because it means that there is no inflation in wages yet, which will likely to keep the Federal Reserve reluctant to raise rates in the near term. Consequently, the Dollar may lose more ground ahead of the weekend.

 

Weaker NFP and unemployment data combined with wages coming in higher than expected should lead to a notable recovery in USD across the board as hopes for faster tightening will be back on the table.

 

In short, wages growth data is likely to overshadow any positive or negative outcomes from NFP or the unemployment rate.

 

USD Index Levels

 

The US Dollar Index broke below its 94.70’s support area and closed the day well below that support.  The index also tested its 94.30’s support area, which remains solid so far. However, the bearish outlook remains and the next support area stands at 94.0, a level we believe might be tested during the day.