NFP will not be a Game Changer for the Fed
Joe Perry October 4, 2019 10:01 AM
The headline NFP Payroll number should not sway the Fed in their decision.
The headline NFP number for September was marginally weaker at 136K vs the 145K expectation. However, with the revision to August’s number from 130K to 168K, the overall headline number will be looked at as slightly better than expected. The headline NFP Payroll number itself should not sway the Fed in their decision to cut rates on October 30th. The unemployment number dropped to 3.5% in September from 3.7% in August.
However, the Average Hourly Earnings (MoM) dropped from 0.4% in August 0.0% in September, vs an expectation on 0.3%. This is a huge miss and will heighten the Fed’s awareness to a slowdown in inflation over the month. The FOMC meets again on October 30th. In theory, lower inflation would lead to a lower US Dollar, which would lead to more rate cuts.
Immediately after the release of the data S&Ps spiked higher, mostly likely a “relief rally” from 2900 to near 2020. Given all the poor data released this week, the market is content to have a number that is inline/slightly better. S&PS are closing in on the 50% retracement at 2925 from the Oct 2nd high to yesterday’s lows. Support is at today’s lows of 2896.75. Next support is yesterday’s lows at 2855.
Source: Tradingview, FOREX.com, CME
USD/JPY also spiked after the data release, possibly also on a relief rally. However, on a 240-minute chart, one can see that a double top has been formed, with the neckline broken near 107.05. This breakdown has failed for the moment, as horizontal support was held at 106.68. However, a break below this level may confirm the next move lower. To find the target for a double top, take the distance of the high to low between the 2 highs, and add it to the breakdown point. The target in this case is near 105.45
Source: Tradingview, FOREX.com
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.