Friday is the first day of November, so that means it’s non-farm payrolls day as well the start of what was known as “wind monath” in Anglo-Saxon times, as cold winds began to blow.
Whether an ill wind will blow from the NFP report, is what the market wants to know, though “bad news is good news” for those traders who are of a similar mind to President Trump and are looking for anything that could boost the rationale for more interest rate cuts, with all the ensuing implications for global financial markets.
Around 89,000 new jobs are forecast to have been created this past month, down from the 136,000 last time and significantly lower than the twelve-month rolling average of 179,000, while wage growth is seen picking up from 2.9% a month ago to 3.0%.
Striking workers at GM will contribute to the lower number, but the trend rate of growth has been slowing since April and a low number would represent an accelerating decline in the jobs market and be negative for the dollar.
After the Federal Reserve this week cut interest rates for the third time in 2019, weakening labour market data could spark talk of another rate cut in December.
The market currently sees a 19% chance of a cut in December and 35% in January 2020, according to CME’s Fedwatch tool.
“A soft NFP read could give a good insight on Fed doves’ readiness to step back in,” said Ipek Ozkardeskaya at London Capital Group.
However, alongside the rate cut this week, the Federal Reserve policymakers tweaked their policy statement to suggest they feel they have delivered on the promise to make “insurance cuts” and will now sits on the sidelines.
“However, Chair Powell did not rule out completely the chances of further easing in the future and indicated the Fed would only consider hiking rates when inflation picks up significantly and persistently,” said Hussein Sayed, chief market strategist at FXTM.
Of the NFP report, he added: “Given that the US economy is running on one engine now, which is the consumer, we need healthy figures to sustain the equity rally. However, if jobs growth comes well below expectations or wage growth slows further, we may see a pullback in stocks and a further fall in USD.”
Evraz excitement? Not likely
Earlier this month the Russian steel basher told investors it was now targeting cost savings of US$300m per year from next year, with US$350mln expected this year from its “efficiency improvement programme”.
For the current year, Evraz estimates capital expenditure will be around US$850mln, then rise to US$1bn for 2020 to 2023 as it considers three major investment projects with the target to increase sales of finished steel products.
Significant events on Friday 1 November:
Economic announcements: US non-farm payrolls, manufacturing PMI data for UK, USA, China