The markets are set to face what traders have waited for- the US jobs report, which could certainly make or break the markets. It is the most important data not only for the US equity markets, but also for global markets, and this month in particular it has even greater prominence. Traders are expecting a sturdy reading of this number and the projection is for nearly double the number of last month’s number i.e from 74K to 180K
However, the leading indicators are pointing for a weaker number and threat could be to the downside. We think that if the number falls below the 120K, then we could potentially say that tapering is conceivably making its impact on growth. The equity market may take this as a good news, and we could see a rally for the equity market, because the likelihood of further tapering may go lower, especially for the aggressive stimulus exit strategy, which Charles Evan, the Fed member, mentioned this week during his speech.
But, the job growth is not the only factor which will be gauged by the Fed because, we do have another component, which is the unemployment rate, and this rate has fallen consistently for the past 2 months and there is possibility that this rate may hit the Fed threshold number today, which is 6.5%. If the unemployment rate does show further improvement today, even by another 0.1%, we may see a sell off in the equity market.
Back in Europe, we are not expecting any major move in the markets ahead of this US payroll data. Generally, traders will stay on the sidelines, and volume is very thin, before we see the firework- the US jobs data. Having said that, we do have industrial and manufacturing data due for the UK at 09:30 GMT and the forecast is for 0.6%. If we do get a strong reading of this data, then we may see another upward revision for the UK GDP growth. In
Disclosure & Disclaimer:
The above is for informational purposes only and NOT to be construed as specific trading advice. responsibility for trade decisions is solely with the reader. by Naeem Aslam