During the week starting October 4, the US will release a series of impactful economic updates that will either make the existing tension even worse or lift the burden off investors betting on a strong US economy.
Nonfarm Payrolls is the most awaited report, as it reflects the job market trends and is closely watched by the Federal Reserve, which decides the monetary policy and thus directly influences the performance of the US dollar. Here are the main events related to the US economy scheduled for the week ending October 10:
- Monday – the US Census Bureau will release data on factory orders for August, which is expected to increase by 1% after adding 0.4% in July.
- Tuesday – the Bureau of Economic Analysis will publish data on imports and exports. Elsewhere, IHS Markit, an independent market research firm, will release its US services and composite purchasing managers index (PMI) for September. However, investors will pay more attention to the Institute of Supply Management’s (ISM) Non-Manufacturing PMI for the same month, with analysts anticipating a decline to 60.0 from 61.7 in August.
- Wednesday – investors will make a first impression on the job market based on the ADP Nonfarm Employment Change report for September.
- Thursday – the US Labor Department will release its weekly report on initial applications for unemployment benefits, which has increased for three straight weeks.
- Friday – finally, the last business day of the week will be very important as the Bureau of Labor Statistics will release the Nonfarm Payrolls report, which may decide the next major moves of USD-related pairs.
US Jobs Market Likely Improved in September
Last month, investors were disappointed with the Nonfarm Payrolls data for August, as the US economy added only 235,000 jobs versus over 1 million in July. The leisure and hospitality sectors were the most affected ones due to the resurgence in COVID-19 cases caused by the Delta variant, which hit demand at hotels and restaurants.
This time, analysts expect the US economy to have added half-million jobs in September, at least based on a survey conducted by Bloomberg.
Employers likely accelerated their hiring last month, suggesting some progress toward filling a record number of vacancies.
While payrolls are expected to double compared to August data, the unemployment rate is anticipated to have declined to 5.1% from 5.2%.
Bloomberg economists said:
“Next week’s nonfarm payroll report (Friday) — the only new jobs report FOMC participants will get before the November meeting — will be the decisive datapoint that will seal the taper deal.”
Indeed, upbeat jobs data would open the door for the Fed to start reversing its bond-buying program from as early as November. This will be a double bullish signal for the US dollar, which may continue its bullish stance versus the euro and other majors.
EUR/USD is already trading at the lowest since July 2020 at 1.1519 after breaking below strong support near 1.1600.
If Nonfarm Payrolls data beat forecasts on Friday, the downtrend may continue to the point of a breakout below 1.1500, with the Dollar Index likely to consolidate well above 94.000.