With all eyes directed towards today’s release of May’s jobless figures, markets are set to open cautiously higher.
The Dow Jones is tipped to open about 10 points higher at 17,848 while the broader-based S&P 500 is seen starting at just under 2,107, up about one-and-a-half points on last night’s close.
As usual, the monthly jobs stats will be closely analysed across the globe for clues on the Fed's next moves and what it all may mean for the global economy.
Particularly, in focus is the prospect of a rate rise this month at the Fed's next policy meet.
Of course, there's a lot for the macro-economist to consider at the moment and Friday's job creation number comes hot on the heels of news yesterday that the European Central Bank is holding interest rates at record lows despite moving higher its forecasts on inflation and growth for the region.
Back in the USA, the payrolls processing firm ADP’s private firm payroll number, always a pre-cursor to Friday's big event, came in on consensus at 173,000, but this may not have been adjusted for the mobile phone firm Verizon strike, which the Bureau of Labor Statistics has already said will remove approximately 35,000 workers from May.
This supports the view that non-farm payrolls (NFP) will come in below 200,000 again, possibly as low as last month’s figure of 160,000.
Chris Beauchamp, at spread betting firm IG Index, colourfully noted that every non-farm payroll report seems to get handed the moniker "the most important NFP day since [x]," but said that this one perhaps does deserve top billing.
"Tomorrow’s non-farm payrolls are expected to see 160,000 jobs added, down from last month’s 170,000, while the unemployment rate is forecast to drop to 4.9%,” he wrote on Thursday.
“Average hourly earnings, so long the missing piece of the puzzle, are expected to rise by 0.2%, down from the April figure of 0.3%," he said.
Beauchamp reckons: "For the Fed to really move towards a June hike (even if only 25 basis points), we would need to see much stronger job creation figures, and a healthy rise in wages.
"If the figure only squeaks in at expectations, or indeed is weaker than forecast, then we can expect to see the markets' rate hike expectations, currently 22% for June and 52% for July, unwound significantly (recall the forecast hit 32% following the release of the May minutes).
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