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Dollar and Gold fell, NFP Expectations are Only 740,000

Summary

On Thursday (September 2), the U.S. dollar hit a new low of 92.20 since August 5. Although the number of people claiming unemployment benefits for the first time was slightly higher than expected, the risk appetite caused by the Fed’s dovish signal continued; the euro against the dollar remained at Near the one-month high, the previous ECB policymakers’ speeches made inflation concerns still the focus of the market. The price of gold fell slightly. Even if the yields of the U.S. dollar and U.S. bonds fell, it still failed to support the rise of gold prices; investors are paying attention to the August non farm payroll data in the United States to determine the future Fed policy path and gold price trend. Oil prices rose sharply, with U.S. oil and Bursa oil hitting nearly one-month highs to US$70.61/barrel and US$73.47/barrel respectively; the rebound was driven by optimism about global economic growth, and previously released data showed that US crude oil inventories fell more than expected.

The US Department of Labor will announce the August non farm payroll report. Following the strong non farm payroll performance in June and July, the importance of the August non farm payroll report is self-evident. After the global central bank meeting, the market is still controversial about the Fed’s timetable for reducing QE during the year. If the new non farm payroll population continues to grow strongly in August, the time for reducing QE may be extended to this month, and the U.S. dollar will reverse its decline. Gold falls, otherwise, the time for reducing QE will continue to be delayed, the US dollar will continue to be under pressure, and the price of gold will rise to a higher level.


It is currently estimated that the non farm payroll population will increase by 748,000 in July, the unemployment rate will be 5.2%, and the average hourly wage will increase by 4.0%. Forecasts of 25 large investment banks show that major investment banks have a large gap in the expected growth of non farm payroll population in August. Specifically, the growth rate of non farm payroll population in the United States after the August seasonal adjustment is expected to be between 400,000 and 1 million, and the unemployment rate is expected to be introduced. At 5.1%-5.3%, the average annual rate of hourly wage increase is expected to be 3.6%-4.1%.


Market analysts believe that the disappointing US August ADP employment report on Wednesday seems to have poured cold water on the optimistic expectations of Friday’s non farm payroll report, although the positive correlation between the two has gradually weakened in recent years, and the non farm payroll data has improved. Investors and the U.S. dollar are expected to be encouraged to start valuing the Fed’s quantitative easing (QE) reduction announced at this month’s meeting, and postponing to November or December will trigger a fall in the U.S. dollar. Again, this is not a question of "if" but " When is the question.


Fed officials have made it clear that they are working on a plan to reduce bond purchases, but have not promised a date for action. Strategists at TD Ameritrade, which is expected to announce the code reduction in December, believe that if the next two monthly employment data perform strongly, they may move forward one month when the expected code reduction is announced. Art Hogan, a strategist at National Securities, believes that if the data on Friday is good, a reduction may be announced as early as this month.


Risk Warning: The above content is for reference only, and does not represent JRFX’s position. JRFX does not assume any form of loss caused by any trading carried out in accordance with this article. Please consult your financial planner for your investment portfolios and manage your own risk.


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