What can be expected at the financial markets upon US employment data publication?

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Today, investors will focus on be the publication of the unemployment data in the United States. Numbers will show the state of the labor market in September after the end of receiving payments by Americans under the aid program adopted in the spring of this year.

It was forecasted that the US economy should have received 850K new jobs in the non-agricultural sector in September against 1.371K a month earlier. The unemployment rate is also expected to fall to 8.2% from 8.4%.

How can American stock market react to these economic statistics?

Of course, the forex market will be the first to react to the number of new jobs.

In my opinion, if the numbers appear as predicted, this will not lead to any noticeable movements in the foreign exchange market. The pairs with the US currency most likely stays the same since these values have already been taken into account in the quotes. But, if they come out above or below the estimated figures, then here we can expect an unusual development of events.

If the values turn out to be higher than expected, the dollar will receive support. Still, it will most likely be local, since positive values will increase demand for American companies’ shares. That will ultimately put pressure on the dollar rate, leading to its decline at the United States trade opening. It may happen because the demand for risky assets (company shares) usually leads to a weakening of the US currency.

Now let’s consider another possible scenario for the development of events. If data on the number of new jobs in September come out below the forecasted values of 850K, this will also lead to a slight decrease in the dollar exchange rate. Investors will traditionally react to weaker values by selling. Still, then, the same bad news could lead to a drop in demand for shares of companies with a simultaneous strengthening of the American currency, which will win as a safe-haven currency.

What to expect soon

The described expectations for the possible development of events may show the market reaction shaping since this spring to weak economic data in conjunction with the corresponding dynamics of the dollar exchange rate. Despite all the ambiguity present in the market, given the strong data on the number of new jobs from ADP presented on Wednesday, I believe that the likelihood of positive NFP data is higher, which means the US stock market may continue its rise.


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By Maksim FXbro