FRIDAY IS NONFARM PAYROLLS DAY
US nonfarm payrolls are set to dominate the headlines Friday, giving investors a fresh glimpse into the world’s largest economy.
The official jobs report will be released at 12:30 GMT, and is expected to show another robust month of hiring. Economists are expecting the creation of 180,000 nonfarm jobs for the month of August, following a better than expected 209,000 addition the month before.
The unemployment rate will likely hold at 4.3%, provided there are no changes in workforce participation. Meanwhile, average hourly earnings are forecast to rise 0.2% on month and 2.6% annually.
Following nonfarm payrolls, investors can expect the latest manufacturing PMI data from IHS Markit and the Institute for Supply Management. ISM’s report is expected to show steady expansion in the US manufacturing industry last month.
The final University of Michigan consumer sentiment index is also due at 14:00 GMT. Separately, the Commerce Department will report on July construction spending.
IHS Markit will release several PMI reports during the European session, including separate data for Italy, France, Germany, Greece, United Kingdom and the broader Eurozone.
Earlier in the day, Caixin reported a slight pick up in Chinese manufacturing output last month. The August manufacturing PMI rose to 51.6 from 51.1, confounding forecasts calling for a slight decline.
The US dollar has seen plenty of action this week. The currency was last down 0.1% against a basket of six rivals, as expressed by the US dollar index.
After taking a sharp U-turn on Wednesday, the EUR/USD partially recovered during Thursday’s session. The pair regained the 1.19 level after bottoming out at 1.1843. A clean break above 1.1910 is needed to generate further upward momentum. Above that key level, the pair faces resistance at 1.1945, followed by 1.1984. On the opposite side of the ledger, immediate support is located at 1.1859, followed by 1.1812.
The British pound held steady on Thursday, as the dollar bulls paused ahead of nonfarm payrolls. The GBP/USD has been on a gradual downtrend over the past month. After peaking above 1.32, cable has fallen back below 1.30. Economic data are the primary focus for Friday’s session. A solid US jobs report will likely push the dollar higher against the pound, which has lost much of its luster amid ongoing Brexit negotiations.
The USD/CAD reversed course on Thursday to finish sharply lower after Canada posted much better than expected second quarter GDP. The Canadian economy expanded at an annualized 4.5% in the second quarter, blowing past expectations of 3.7%. The USD/CAD plunged nearly 200 pips. The pair was last down 0.2% at 1.2456. Upward momentum will likely continue now that investors are fully pricing in a rate hike this year.