European update – Attention turns to US jobs data

US jobs report to show fears are overhyped?

It’s been an action-packed week in the markets, particularly over the last couple of days and fortunately, that’s not letting up today.

Source – Thomson Reuters Eikon

The US jobs report is arguably the most important and widely followed economic report each month and this month is no different. It’s been a weird year so far when it comes to the jobs report, with the government shutdown likely being responsible for playing havoc with the data. That appeared to have settled down last month, with job creation being more in line with the norm and unemployment and wage growth being back on track.

We’re expecting another strong report this month – unemployment 3.8%, 180,000 new jobs and 3.4% earnings increase – which begs the question, is the economy really as vulnerable as so many seem to fear? The Fed may have come around to the idea that the risks are mounting and the inverted yield curve may well have given it the creeps but they’re not yet bowing to the idea that rate cuts are warranted.

In going against the market, the Fed provided a big lift to the dollar this week just as it was experiencing something of a correction. Now we’re back near the highs and it’s become a question of whether today’s report will spur it on further or just convince traders that the Fed is wrong and will eventually come around to the markets way of thinking.

US Dollar Index

Source – Thomson Reuters Eikon

Economic Calendar

For a look at all of today’s economic events, check out our economic calendar.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam

Craig Erlam

Senior Currency Analyst at OANDA
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.