If US jobs report were to beat estimates, short AUD/USD?
Jobs report tonight will offer clues whether there will be three or four hikes in 2018. This compromises of all of the three components: non-farm payrolls, unemployment rate and wages growth which are all equally important.
- The labour market is in a good shape; earlier indicator shows that ISM employment PMI rose to 58.5 in August from the prior month
- The broader uptrend in economic growth which is driven by stronger consumption should support the labour-market in August
- NFP may add 205,000 workers last month after 157,000 in July
- A stronger jobs market may help to lower the jobless rate back to 3.8%
- We expected average hourly earnings to rise to 2.7% from a year earlier for the third month straight
- Low unemployment rate and a solid economy may mean that the September interest-rate hike is confirmed
- Moderate pay growth last month is one of the reasons why investors aren’t fully convinced that Fed will deliver a fourth hike in December this year. Thus, investors will focus on pay growth tonight to see whether there would be any changes
- Dollar remains to face upside risk after the jobs report tonight
- AUD/USD has been ranging at the 0.7150 region for a few days now. It is currently sitting on a major support which is a 2016 low. If dollar were to strengthen due to a stronger NFP results, that support could break and price could hit 0.7080 tonight.
Fullerton Markets Research Team
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