© Reuters. Scenarios for expected US labor market data and their impact on the dollar
Arabictrader.com – The currency markets are awaiting the issuance of data during last March, which will have a very strong impact on the movements of the US dollar against other currencies, in addition to its expected strong impact on the stock and metal markets such as commodities and digital currencies, on top of which is Bitcoin. Here is a look at the upcoming data and how Affecting dollar trading:
First: A look at the US labor market data during last February:
The US labor market data came somewhat positive during last February, as the economy added about 311 thousand jobs, while it was expected to add only about 224 thousand jobs, after the economy had added about 504 thousand jobs last January.
On the other hand, unemployment rose to 3.6% in the same period, worse than market expectations and the previous reading, which indicated its stability at 3.4%, while wages recorded a growth of 0.2% during the same period, less than expectations, which indicated a growth of 0.3%. This data had a strong and clear impact on the dollar’s movements against other currencies.
Second: Evidence for the upcoming US labor market data:
During the previous period, many economic data were issued that may give an indication about the performance of the US labor market data during last March, as the data was significantly negative, and therefore this may have an impact on the US labor market data expected to be issued, and the following are the most important of these indicators:
- The US Unemployment Claims Index: It showed great positivity during last December, as the data issued by the US Labor Statistics Bureau over the past four weeks revealed that most US unemployment claims stabilized at the highest level of 200,000 requests, and aid requests continued to rise significantly during last March compared to February. This may give an impression that the labor market has started to suffer, albeit slightly, by raising interest rates.
- At the same time, data from the US Bureau of Labor Statistics showed negative employment data in the US private sector during the month of March, as the data showed that jobs in the US economy in the non-agricultural sector increased by about 145,000 jobs during that period, worse than market expectations, with the US economy adding about 208 thousand jobs. It is also worse than the previous reading, which recorded only about 261 thousand jobs during February.
Third: Market expectations regarding the US labor market data:
Market expectations indicate that the interest rate hike will continue to negatively affect the upcoming US labor market data. According to expectations, the US economy is likely to add about 236,000 jobs only. Expectations also indicate a wage growth of 0.3% during the same period, in addition to the stability of unemployment at the level of 3.6% at the end of last March.
Fourth: How will the US labor market data affect the dollar’s movements, and what are the expected scenarios?
Currently, the US dollar is settling near the 102-point level, affected by the negativity of US economic data during the past few days, and therefore the US dollar is waiting for the US labor market data to be issued until it provides strong support for it to prevent its collapse below the 100-point level in the coming days.
The scenarios for the US labor market data are: positive data, which is the first scenario, And to come better than expectations, as the economy adds many jobs, and unemployment decreases below the level of 3.6%, and wages grow at a very strong pace, and this positive scenario for labor market data may provide strong support for the dollar index towards the level of 103 points, and it may head towards the level of 104 points or higher. In addition, because this scenario will give the US Federal Reserve greater flexibility regarding the continuation of raising interest rates during the next May meeting, and on the contrary, both digital currencies will be affected after the issuance of this data.
While the second scenario is represented in the negative data of the US labor market And for the economy to add jobs less than expected and for unemployment to rise above the level of 3.6%, and in this way, the dollar may decline near the level of 100 points or less than that towards the level of 99 points or less, because this scenario will make the Federal Reserve fear of raising interest, and it may wait for the issuance of The upcoming inflation data until it takes a decision regarding the interest rate, but the negativity of this data may make the Fed stop raising interest rates, especially with continued concerns about the US banking sector crisis, and this will have a negative impact on the dollar and positively on gold and digital currencies in particular.
