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US Jobs Up Next

On the back of the FOMC meeting this week, today’s US jobs report will draw plenty of attention. However, instead of the headline NFP results, the bigger focus will likely be on wage growth data. With the Fed having pivoted to a smaller .25% hike this time around and sounding more constructive on inflation coming down, traders are now looking to gauge the likely end of the bank’s tightening operations. While the bank has signaled that further hikes will likely be necessary, the market is now looking for just .5% more worth of hikes, by summer, before the Fed pauses on rates. This is well ahead of the end of 2023 date the Fed itself projects.
 

Wage Growth in Focus

Looking at today’s data, if wage growth is seen cooling last month, this will be taken as a strong sign that inflation is continuing to fall. In this scenario, USD is likely to weaken as traders strengthen their conviction in an earlier end to Fed tightening, lifting stocks. Any surprise uptick in wage growth, however, would likely see stocks come under sharp pressure, muddying the near-term picture a little and likely seeing USD back underbid.  Worth noting too that the unemployment rate is forecast to lift a little. If seen, this will no doubt add to recessionary concerns, particularly if we see a larger-than-forecast jump.
 

Technical Views

S&P 500

(Click on image to enlarge)

The rally in the S&P has seen the index breaking out above the bearish trend line and above the 4153.50 level. The rally has stalled for now. However, while price holds above this level and with momentum studies bullish, the focus is on an eventual break higher towards the 4305 level next. Should price slip back below the 4153.50 level, 3910 will be the next key support to note. 

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