The global financial community is poised at the edge, eagerly awaiting US non-farm payroll data due today. This palpable sense of anticipation is evident as Dow is ensnared in sideways motion after crossing the crucial 33,000 psychological mark. Additionally, Dollar Index is retracing steps after touching its highest level in almost a year, and 10-year Treasury yield is cooling off from its pinnacle since 2007.
The upcoming data’s multifaceted nature, covering job growth, unemployment rates, and wage growth, complicates the prediction of market reactions. If these metrics present a disjointed picture, deciphering the market’s response becomes even trickier. Robust employment figures could potentially reinforce the prospect of an additional Fed rate hike before year’s end. However, a spike in Treasury yields, a byproduct of strong data, could, paradoxically, reduce the necessity for another move due to tightened financial conditions. Nevertheless, both scenarios would likely dampen stocks, and in a climate of risk aversion, bolster Dollar.
Today’s market expectations hinge on a 168k increase in headline non-farm payrolls growth for September, with an anticipated decline in the unemployment rate from 3.8% to 3.7%. Predictions also point towards a 0.3% mom rise in average hourly earnings, keeping the annual rate steady at 4.3% yoy.
However, other employment-related metrics present a mixed picture, notably the disappointing 89k growth shown by ADP private employment. On the brighter side, ISM Manufacturing employment index showed improvement 48.5 to 51.2, even as its services counterpart registered a dip from 54.7 to 53.4. The four-week average of initial jobless claims also saw a decrease from 229k to 209k.
Technically, NASDAQ has been in range trading since falling to 12963.16 late last month. Sustained break of 38.2% retracement of 10088.82 to 14446.55 at 12781.89 will strengthen the case that rise from 10088.82 has completed. That would also mean that the long term pattern from 16212.22 has already started third leg. Deeper fall would be seen to 61.8% retracement at 11753.47 next in the near term.
Nevertheless, strong rebound from current level, followed by sustained break of 55 D EMA (now at 13524.91) would argue that rise from 10088.82 is still intact. Another rally through 14446.55 would likely be seen before NASDAQ tops.
