The U.S NFP data: Can the jobs report open the door for September tapering?

Key points

• The fed set to announce tapering
• Delta variant set to slow down the hiring process
• NFP data exp; 680K, cons; 750K, Pre: 943K
• Technical outlook

What we can expect from U.S NFP data ?

The U.S NFP data is scheduled for tomorrow will be a key focus for investors as we get into summer as it will provide guidance for the tapering timing expected for September.

As we noted on Friday, Fed Chairman Powell spoke cautiously in his highly anticipated Jackson Hole speech, warning of the risks of premature policy tightening and reiterating that there is still “plenty of room to maximize employment in the US. economy of the United States “. Most traders believe that this speech may prevent the Fed from announcing the cut at the September meeting, allowing the market to pay attention to the November Fed policy meeting, which is the full report from the three nonfarm payrolls (NFP data) going forward.

The Federal Reserve is about to announce and begin to scale back its quantitative easing asset purchase program If nonfarm employment(NFP data) is strong (for example, 650,000 or more), this can help drive momentum for ideas announced on September 22 and implemented in October. If it’s soft (for example, 450k or less), which may mean officials want to see another month of data before choose to announce on November 3 and implement it in December. Either way, Fed officials said the US economy is resilient and will be able to withstand the latest wave of Covid cases, so it is likely to be reduced this year. More officials also warned that inflation will last longer and financial stability risks associated with rising asset prices.

After releasing the two 900,000+ figures in June and July, we forecast the number of employed people to be 680,000, while the general forecast is 750,000. The resurgence of Covid Delta variants has clearly affected the travel and hotel industries, as consumer psychology has gradually generated a certain degree of caution, which may lead to a slight decline in momentum. However, the underlying economic demand is strong, and companies are still worried about the lack of suitable workers, so this provides a solid foundation. Given the competition for employees with the required skills, we expect the unemployment rate to drop to 5.1% and wages to further rise to 4.1% year on year.

Technical outlook of gold

The closely watched NFP data may provide a clear picture as to when the Fed may start tapering. This will play a very key role in determining the next direction for the Gold price as the journey to $1,900 is still held on by the resistance level at $1,832.

The prudent approach is to wait for a continuous breakthrough of the daily resistance zone (near $1,832) and then prepare for further appreciation. Momentum may push XAU/USD to a key obstacle near the $1,875 area. If cleared decisively, it will re-establish a bullish breakout and pave the way for further gains. Gold may accelerate the next relevant resistance level, which is the kinetic energy near the $1,900 area.

LULAMA MSUNGWA

Research & Markets Analyst

Scope Markets