Markets are tuned positive ahead of the Non-Farm Payrolls release later
in the day. The S&P broad market index updated all-time highs at 4311
points, Brent crude prices jumped above $77.0 per barrel, a maximum not reached
since October 2018. The U.S. Dollar also posted gains of 0.5%.
Such peculiar picture may be explained by the Non-Farm Payrolls, as
investors prefer to stick to the Greenback while pushing risky assets’ prices
up too. It is really hard to say if this construct would survive the labor
market data release as most of the instruments’ prices are heavily strained
from the usual price movements curve. Moreover, statistical modeling of the
labor data in the U.S. suggests controversial signals. Thus, Non-Farm Payrolls
modeling considering a recent decrease in initial jobless claims by 21,000
gives an overall 690,000-700,000 jobs increase in June, which is close to the
consensus figure of 700,000 jobs.
The unemployment levels is much harder to asses after May levels were
seen exaggerated. So we may see unemployment in June at a steady 5.8% despite
an overall decrease of jobless claims by 300,000 last month. The unemployment
level may even edge higher to 5.9% but would hardly decrease to the forecasted
5.7%. Average hourly earnings may also sustain in June at 0.4-0.5% amid lack of
the available labor force in the United States as government continue to pay
stimulus checks to support American families.
Finally, we may get moderately positive Non-Farm Payrolls report that
would show continuous economic recovery in the United States, but, on the other
hand would send signals to the Fed to continue its stimulus measures, including
massive monthly $120 billion bond purchase program.
In this case the S&P 500 index may renew its all-time highs above
4280 points. Most important in this case to stay sharp as correction risks are
extremely high now.
Crude market may also end this week close to three-year highs.
Gold prices would hardly benefit from such report as they would hardly
get an impulse to move in either direction. So, the trading range of $1750-1800
per troy ounce may remain intact by the end of this Friday.
Currency
market would not benefit from moderately positive Non-Farm Payrolls report.
Technically we may say the Greenback is a little overbought and we may expect
it lower. The EURUSD is sitting close to the important weekly support levels.
Optimal levels for buy positions might be considered at 1.18400-1.18600 with a
target at 1.19300. However, such unsuccessful attempts were made yesterday. So,
chances of this scenario are now lower.
GBPUSD
is below its support level at 1.38400, but the pair is not interesting for
opening buy positions.
The
USDJPY has surprised the market as it almost reached the level of 111.95, where
sell positions would be most attractive. Non-Farm payrolls may provide such a
boost opportunity for the pair.