Strong Non-Farm Payroll and Weaker ISM Manufacturing Data Send Mixed Signals
Joe Perry November 1, 2019 2:53 PM
The data on the day is mixed…better employment, weaker manufacturing, mixed inflation.
The US Nonfarm Payrolls Change was released earlier today with the US economy adding 128,000 jobs to the economy, beating expectations of 89,000. October’s numbers were revised higher as well, from 136,000 to 180,000. The revision makes October’s headline data even stronger. The inflation component was just as strong. Although the headline Average Hourly Earnings number was a slight miss at 0.2% vs 0.3% expected, September’s number was revised from 0% to 0.4%!! Although this data is strong, the next Fed meeting isn’t until mid-December
Contrary to the NFP data, the ISM Manufacturing PMI for October came in slightly worse at 48.3 vs 48.9 expected and 47.8 last. Below 50 means that the economy is contracting. This is the third straight month of contraction. Even more worrisome is the ISM Manufacturing Price Index, which fell to 45.5 vs expectation of 49.9 and 49.7 last.
So, the data on the day is mixed…better employment, weaker manufacturing, mixed inflation. According to the CME FedWatch Tool, there is currently only a 14% of a rate cut at the December 11th meeting. However, there is a lot of data remaining, including November’s data for NFP and ISM. The stock market doesn’t appear to be concerned about the ISM data, as the S&P 500 Futures in putting in all time new highs above 3060 after this mornings data dump.
Source: Tradingview, CME, FOREX.com
Not to beat a dead horse, but as stocks continue to put in all time highs, its tough not to write about them. As S&Ps break through the long-term upward sloping trendline dating back to October of last year, the next resistance is the shorter-term upward sloping channel line from October 1st near 3066. Above that S&Ps have room to run to 3105, which is the 161.8% Fibonacci extension from the May 1st highs to the June 3rd lows. Horizontal support comes in near 3045. Next level is the bottom of the channel trendline at 3027.
Source: Tradingview, CME, FOREX.com
With the bid on stocks, the DXY is trading lower on the day and is testing previous lows near 97.14. The selloff from October 8th looks like if may have formed a flag pattern, with a target near 96. If price breaks through 97.14, the next level of support is 96.69, which is the 78.6% retracement from the lows in June to the October 1st highs. Below that support is the June lows at 95.87. Resistance is that the bottom trendline of the flag pattern near 97.70, and above that the longer term trendline and top of the flag near 98.10.
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.