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Market is Waiting for NFP Data, Expected to be 400,000

Summary

On Thursday (January 6), the U.S. dollar mostly rose against G-10 currencies. Affected by rising U.S. bond yields and mixed changes in U.S. stocks, risk-sensitive currencies such as the Australian dollar led the decline, while the yen and Canadian dollars rose. Federal Reserve officials confirmed Interest rate hike may not be far away. COMEX gold futures closed down 2% to 1,789.20 US dollars per ounce, the biggest one-day drop in six weeks. The Fed’s hawkish monetary policy stance put pressure on gold prices. U.S. oil once rose by more than 3%, hitting a new high of US$80.24/barrel since November 17 last year, due to the escalation of turmoil in OPEC+ oil-producing country Kazakhstan and partial supply interruption in Libya.

The US Department of Labor today will announce the December NFP employment report. The NFP data in November was upset again, and a new variant of the virus Omicron followed in December. However, the good news is that the impact of the epidemic should not be reflected in this data. On the whole, the market is still quite compliant with the NFP expectations, especially when ADP employment is significantly better than expected. However, after the NFP upset several times last year, it is necessary for the market to look at the recovery of the labor market more cautiously.


From the Fed's point of view, the labor market is not the focus of its most attention, but has been replaced by soaring inflation. In order to curb inflation, the Fed will inevitably move towards raising interest rates or even shrinking its balance sheet this year. Of course, a healthy recovery in the labor market would be more perfect for the Fed, and it can also curb inflation more effectively, but it is often impossible to have both. .


The forecasts of 24 large investment banks show that the major investment banks have a large gap in the expected increase in the NFP employment population in December, but the unemployment rate and the average hourly wage rate are expected to be closer. Specifically, after the US December seasonal adjustment, the NFP employment population growth rate is expected to be between 260,000 and 600,000, the unemployment rate is expected to be between 4.0% and 4.3%, and the average hourly wage growth rate is expected to be between 4.0% and 4.2%.


It is worth noting that, compared with the increase of 210,000 in November, most investment banks believe that NFP increase in December will stimulate the Fed to raise interest rates in advance and reduce bond purchases, which will benefit the US dollar index.


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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