Release: Friday at 12:30 pm GMT
It’s that time of the month again.
The US employment situation report is scheduled to be released at 12:30 pm today, delivering unparalleled insight into the condition of the world’s largest economy.
Based on the US dollar index this year—a geometric average weighted value of the USD against a basket of six international currencies—volatility derived from the release shows average (mean) volatility was approximately 26 points in the first 15 minutes.
40 percent of the time, price reversed primary direction; 60 percent witnessed continuation movement.
Non-Farm Payrolls Employment Change
Employment is a widely watched indicator due to its timeliness, accuracy and importance, as well as being considered a leading indicator of consumer spending. The non-farm payrolls release is a measure of new payrolls added by private and government organisations in the US, reported each month by the Bureau of Labour Statistics (BLS).
450,000 non-farm payrolls are to be added to the US economy in October, according to the median estimate. Some desks, however, feel a higher-than-expected print may emerge, with forecasts as high as 700,000.
The unemployment rate, also referred to as ‘joblessness’, is a closely followed economic indicator. The unemployment rate is derived from a monthly survey called the Current Population Survey (CPS), made up of approximately 60,000 households.
The US unemployment rate dropped to 4.8 percent in September 2021, sliding from 5.2 percent in the previous month. Unemployment is to tick lower again in October to 4.7 percent, according to the median estimate.
Average Hourly Earnings
Calculated by the BLS (establishment survey data), average hourly earnings measure the amount employees make each hour in the US. Average hourly earnings for US non-farm employees is a leading indicator of consumer inflation and also the earliest data in terms of labour inflation.
Average hourly earnings increased 19 cents, or 0.6 percent to $30.85 in September, beating market estimates of 0.4 percent. This follows five consecutive months of increases. October’s print, however, is anticipated to drop to 0.4 percent.
ADP Non-Farm Employment Change (October)
Published by the ADP Research Institute, in collaboration with Moody’s Analytics, the ADP non-farm employment change estimates the number of employed during the prior month, excluding the farming and government industry.
The report, derived from ADP’s payroll database (one-fifth of US private payroll employment), measures the change in total non-farm private employment each month on a seasonally-adjusted basis. ADP is widely considered an early snapshot of the upcoming BLS report.
Private sector employment rose by 571,000 jobs in October, beating September’s downwardly revised 523,000 figure and further beating market estimates of 400,000.
‘The labour market showed renewed momentum last month, with a jump from the third quarter average of 385,000 monthly jobs added, marking nearly 5 million job gains this year’, said Nela Richardson, chief economist, ADP.
ISM Manufacturing PMI (October)
Albeit representing a marginal dip of 0.3 percentage points from September’s reading of 61.1 to 60.8 in October (market estimates: 60.5), the recent report is still considered positive—considerably north of the 50.00 mark showing an expanding economy.
The Institute for Supply Management (ISM) is a survey of approximately 300 purchasing managers, asking respondents to rate the relative level of business conditions.
ISM reported the following:
- This figure indicates expansion in the overall economy for the 17th month in a row after a contraction in April 2020.
- The New Orders Index registered 59.8 percent, down 6.9 percentage points compared to the September reading of 66.7 percent.
- The Production Index registered 59.3 percent, a decrease of 0.1 percentage point compared to the September reading of 59.4 percent.
- The Prices Index registered 85.7 percent, up 4.5 percentage points compared to the September figure of 81.2 percent.
- The Backlog of Orders Index registered 63.6 percent, 1.2 percentage points lower than the September reading of 64.8 percent.
- The Employment Index registered 52 percent, 1.8 percentage points higher compared to the September reading of 50.2 percent.
- The Supplier Deliveries Index registered 75.6 percent, up 2.2 percentage points from the September figure of 73.4 percent.
- The Inventories Index registered 57 percent, 1.4 percentage points higher than the September reading of 55.6 percent.
- The New Export Orders Index registered 54.6 percent, an increase of 1.2 percentage points compared to the September reading of 53.4 percent.
- The Imports Index registered 49.1 percent, a 5.8-percentage point decrease from the September reading of 54.9 percent.
Each month the Conference Board surveys a nationwide sample of 3,000 households, consisting of five questions. The report measures the level of confidence individual households have in the performance of the economy.
Consumer confidence rose to 113.8 in October, exceeding forecasts, and up from September’s upwardly revised 109.8 print.
‘Consumer confidence improved in October, reversing a three-month downward trend as concerns about the spread of the Delta variant eased’, said Lynn Franco, Senior Director of Economic Indicators at The Conference Board.
The Conference Board noted:
- The Present Situation Index—based on consumers’ assessment of current business and labour market conditions—rose to 147.4 from 144.3 last month.
- The Expectations Index—based on consumers’ short-term outlook for income, business, and labour market conditions—improved to 91.3 from 86.7.
FP Markets Technical Outlook—US Dollar Index
Price action shook hands with the decision point from 92.71-93.53 and intersecting trendline support, taken from the low 89.84, to which a stronger-than-expected recovery unfolded.
Ahead of today’s employment release, 2021 tops are nearby at 94.56, followed closely by resistance at 94.65, drawn from 9th March (2020). Breaching resistance unmasks additional resistance from 95.86.
Quasimodo resistance at 94.45 is currently in the frame offering a fragile vibe, despite withstanding an upside attempt yesterday and forming a half-hearted shooting star candle pattern—bearish signal.
Clearance of 94.45 is likely to see a run on 2021 tops from 94.56 and perhaps an extension to an interesting collection of Fibonacci ratios between 94.91 and 94.82, including two 100% Fibonacci projections around 94.86ish.
Meanwhile, on the H1 chart, a bullish pennant pattern is underway, taken from 94.47 and 94.30. Note that the profit objective can be seen as far north as 95.06, arranged a touch north of the Fibonacci resistance mentioned above on the H4 timeframe.
In addition, H1 movement recently overthrew a Quasimodo resistance line from 94.42 and is bound for Quasimodo resistance at 94.52.
Major economic indicators echo a positive tone, in line with the technical picture.
With this, a continuation higher in the dollar is potentially in the offing, targeting daily resistance at 94.56, followed by the H4 timeframe’s Fibonacci resistance between 94.91 and 94.82.
Those long the break of the H1 timeframe’s pennant configuration, therefore, are likely eyeballing a ‘complete’ pattern, targeting 95.06—set just above the H4 Fibonacci resistance.