With one of the most important US Non-Farm Payroll data expected later this afternoon and the last for the year, markets will be looking at the recovery of the US economy. This NFP data print is based on November hiring data, which will be prior to the detection of the now increasing Covid-19 Omicron variant. US President Joe Biden has indicated that response to the new variant will be met through wider vaccine mandates in comparison to previous responses which included wider national lockdowns.
Today’s US NFP data is forecast to add 550K jobs to the US Labor market. The unemployment rate is expected to tick lower to 4.5% from previous 4.6%. Though previous NFP prints have missed expectations because of the Delta variant which caused havoc forcing companies to scale down on hiring. The January US NFP print will highlight the effect of Omicron on the market.
Thursday’s 4-week jobless claims data beat estimates showing a drop in jobless claims with an actual print of 238.75K vs forecast of 245.75K. This gives markets a cue of the hiring trends though it is not always a direct indicator of how the Friday’s NFP will print.
A strong NFP data print will possibly see a rally in the USD as it supports a Hawkish US Fed Chair Jerome Powell recent comments on tapering faster and lift-off of interest rate hiking. A strong NFP data is one that beats analyst estimates. This will likely see the USD gain against is peers.
With volatility still higher (Vix trading at 27.50 at time of print), markets experiencing reprieve with equity markets and fixed income markets recovering from the Omicron led sell-off end of last week and earlier this week. Today’s NFP will give direction of how financial markets are likely to end a volatile 2021.
At the time if print, EURUSD: $1.1292, USDZAR: R16.03, XAUUSD (Gold): $1768, US 10-yr: 1.4430Bps and Nasdaq 100 $15,953.
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