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US November non-farms payrolls preview

Job growth is expected to slow in the latest payrolls report. Is this a sign of tougher times to come?

Job growth to slow

From last month’s 661,00 jobs, this month’s payrolls release is expected to show an increase of 600,000, a modest slowdown, but the lowest reading since the rebound in job creation began earlier in the year. The unemployment rate is expected to improve however, falling to 7.6% from 7.9%. This continues the positive direction of travel from the 15% peak.

But can the US keep adding jobs as the Covid-19 crisis intensifies? Far from turning a corner, the virus situation in the country continues to worsen, with cases still climbing. Crucially, the near-term outlook for the economy has darkened, given the lack of a new fiscal stimulus programme.

ADP numbers this week showed a sharp drop from the expected level and from last month, at 365,000 for the month from 753,000 last month, and a 650,000 forecast. Investors will be hoping non-farm payrolls can avoid following this figure.

Dollar outlook

The week has seen the dollar give up all its late October gains, as the basket heads back to 92.50. This points towards further upside for EUR/USD and GBP/USD, as investors expect the Federal Reserve to move to a more accommodative footing, both to help a slowing economy and to compensate for the reduced chances of a stimulus programme arriving soon thanks to the election result.

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Be ready to act on the next non-farm payrolls report

Explore the influence the non-farm payrolls report has on American markets ahead of the next release on 2 July 2021.

  • Which markets could be more volatile after the NFP report?

  • Why was the report introduced and what does it tell us?

  • Why is the report important for traders?

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