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4 August 2022,06:37

Weekly Outlook

Will JOLTs Data Foreshadow Friday’s NFP?

4 August 2022, 06:37

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On Tuesday evening (GMT+3), the US JOLTs Job Openings data was released, showing 10.689 million job openings, lower than the expected 11 million and the previous month’s value of 11.303 million. This is also the lowest in 9 months. 

Robert Frick, corporate economist at Navy Federal Credit Union, notes: “Fewer openings likely mean the froth is being blown off inflated listings for openings as the economy slows down, not that demand for workers is dropping”. 

Hiring slowdowns and layoffs have hit the US economy, especially in the tech industry where market risk aversion, poor earnings results, and a crypto winter have prompted companies from Robinhood to Tesla to trim their payroll. The finance sector has also seen cuts, while the travel industry continues to hire as Covid-related shutdowns end around the world. 

Post Market

Despite poorer-than-expected job openings numbers, the US dollar has been on an upward rise since Tuesday, with the Dollar Index finding a strong floor at $106 amid risk-averse market behaviour. 

Gold, meanwhile, has been swinging around the $1762 mark as investors await further guidance from macroeconomic data.

The Fed’s main job is to balance inflation with economic growth and employment, which it does so by raising interest rates to bring down inflation. Rate hikes, however, have to be measured as overly-fast tightening can lead to a recession.

Investors are strongly advised to look out for Friday’s Nonfarm Payrolls data, which predicts a drop to 250,000 from June’s 372,000 – indicating a slowdown in the US job market. Strong employment numbers have been repeatedly cited by the Federal Reserve as a counterpoint to whether monetary tightening will cause a recession. 

Should the NFP data underperform like JOLTs, investors should pay close attention to the upcoming US Core CPI Data, which will be released at 15:30 (GMT+3) on 10 August. If inflation proves to have slowed, then the chances of a recession would be lower.

The US NFP data will be released on Friday, 5 August at 15:30 (GMT+3). 

As a friendly reminder, do keep an eye on market changes, control your positions, and manage your risk well. 

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