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US non-farm payrolls preview

The dollar has taken a knock of late, but with the overall trend in the data still strong, that state of affairs is unlikely to last.

Chris Beauchamp ChrisB_IG
Chief Market Analyst, London

Publication date : 2018-08-28T14:12:07+0100

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US jobs growth in August is expected to rebound after recent weakness. It’s expected that 192,000 jobs have been created during the month, up from 157,000 in July. This returns job growth closer to the 200,000 mark that has been viewed as the healthy level for more than three years.

On the wages front, average hourly earnings are expected to rise by 0.3%, in line with the previous month’s figure, while the unemployment rate is expected to fall to 3.8% from 3.9%.

These are not exactly inspiring numbers, but the US economy is solidly into its expansion phase. What is worth noting is that the last 18 months of the Obama administration saw an average of 190,000 jobs created each month. For the first 18 months of the current administration, the figure has been 190,000. For all US President Donald Trump’s boasts about bringing jobs back to America, he has actually achieved very little.

Non-farm payrolls

Discover what the non-farm payrolls report is –
including the date of the next release, and
why it’s important to traders.

Month-on-month wage growth also remains solidly in line with the figures seen since the middle of 2013. It continues to oscillate around the 0.2% month-on-month mark, i.e. good, but not great.

These non-farm payrolls arrive after a difficult two weeks for the US dollar. The greenback has been steadily rising since the end of January, but recent comments from Trump regarding Federal Reserve (Fed) policy, and a general sense of exhaustion in the rally for the time being, have seen the dollar index give back some of its gains.

The $93.50 area on the US Dollar Index represents possible support, with a break below this opening the way to $92.75. Overall the trend is still up from the March lows, with the breakout from the post-2017 downtrend line marking a sea change for the currency. Unless we see the price below $92.00 it makes sense to expect the dollar bull run to revive.

US Dollar Index

US Dollar Index

US Dollar Index

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This information has been prepared by IG, a trading name of IG Markets Limited and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. International accounts are offered by IG Markets Limited in the UK (FCA Number 195355), a juristic representative of IG Markets South Africa Limited (FSP No 41393). South African residents are required to obtain the necessary tax clearance certificates in line with their foreign investment allowance and may not use credit or debit cards to fund their international account.

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