Jobs Increase to Slow Down in NFP Report

The jobs increase in July is expected to slow down to 193K for July while the unemployment rate will likely drop to 3.9%

Market Watch

The Sterling

The pound performed excellently on Monday though its gains indicate a concern by traders about the currency’s prospects prior to the much-expected England interest rate hike on Thursday.

The Sterling on Monday went up by 0.2% at $1.3145. Against the European currency, it traded around 89.08 pence.

The Greenback

The Greenback lost footing against the Japanese Yen on Monday as investors braced for the possibility that the BOJ will announce changes to its monetary easing policy today. Against JPY, the greenback plunged by 0.05% to trade at 110.98 Yen.

Euro also went up against USD, increasing by 0.46% as it recovered from its poor performance against the greenback over the past six weeks. The GBP also rose by 0.25% against the US Dollars.

Yen

After recording gains on Monday, the Yen fell on Tuesday after the Bank of Japan (BOJ) decided to keep interest rates extremely low for an extended period. The dollar was able to regain its footings against Yen as it went up 0.2% against JPY to trade at 111.29. the Greenback will most likely climb to 112.50 Yen.

Events of the Week

 Euro-zone inflation: Tuesday, 9:00.

For July, Headline CPI is expected to be 2% while the Core CPI is slated to remain the same at 0.9% from last month.

Euro-zone GDP: Tuesday, 9:00.

In the Q1 of 2018, the economy of the region slowed down after an excellent 2017. With the factors affecting the economy in the first quarter still persistent, a repeat of the same number is projected in the second quarter of the year.

US Core PCE Price Index: Tuesday, 12:30.

This data is Fed’s favorite when it comes to inflation measure. In May, it stood at 2%. Core PCE is expected to go up by 0.1% and might likely drop from 2% y/y when the figures for June are announced.

CB Consumer Confidence: Tuesday, 14:00.

The Conference Board’s Consumer Confidence level stood at a high of 126.4 points last month. It is expected to go up slightly to 126.5 points for July while the University of Michigan’s number isn’t expected to move much.

US ADP Non-Farm Payrolls: Wednesday, 12:15.

In June, the US ADP NFP was 177K, which was below expectations. This is expected to change in July, with 186K the expected figure.

US ISM Manufacturing PMI: Wednesday, 14:00.

This measure went above the 60 points mark in June to reach 60.2, a level that shows robust growth. However, a similar growth isn’t expected as it will likely drop to 59.4 points.

US Fed decision: Wednesday, 18:00.

Last month, the U.S Fed raised interest rates and indicated two extra hikes before the end of the year. Fed Chair Powell has expressed optimism on the economy. At this meeting, nothing is expected to change. However, any mention of inflation, employment or the ongoing trade war could affect the performance of the greenback. It is expected that a rate hike will happen in September.

UK rate decision: Thursday, 11:00, press conference at 11:30.

The BOE has hinted that it might raise rates in its August meeting. An increase of just 0.75% would see the country’s interest rate hit its highest level since the financial crisis. However, there is a chance that the BOE might not make a move considering the current inflation rate at 2.4%, the retail sales below expectations in June, and the Brexit uncertainty. The BOE will also release the minutes of the meeting which will give traders an insight on how many members support the decision.

US Non-Farm Payrolls: Friday, 12:30.

The most important event of the week is the U.S job report. In June, the figures came out better than expected, hitting 213K. Wages meanwhile disappointed, going up by only 0.2% m/m while the unemployment rate went up to 4%. For July, job increase is expected to be at 193K while the unemployment rate will likely drop to 3.9%. Wages meanwhile is predicted to rise by 0.3% m/m.

The all-important US jobs report beat expectations in June with a gain of 213K. However, wages fell short of expectations and climbed by only 0.2% month over month.

ISM Non-Manufacturing PMI: Friday, 14:00.

The last major event of the week goes to the service sector report. The ISM recorded a strong 59.1 points last month, showing an upbeat growth. It is however expected to slide to 58.7 points for July.