Hello Sir,, What is your view on today's US PMI reports...
- Joined May 2019 | Status: iTrade | 1,427 Posts
US Employment Data - January Preview
Recent impact (gold, eur/usd, and usd/jpy)
Outlook
Forecasts
NFP
Most forecasts are falling within a range of about 142K to 190K. A very important consideration is the most recent forecasts, which are for the most part all toward the upper end of that range. That's a good sign that we could see a better than expected NFP number.
Unemployment rate
The rate is widely expected to come in at 3.5%, unchanged from the previous month.
Avg Hourly Earnings
While most forecasts are calling for 0.3%, there's a significant camp of economists predicting 0.2% reading. Both would be an improvement from the prior month, which was 0.1%.
Recent impact (gold, eur/usd, and usd/jpy)
Last month, the data didn't have as much impact as we've seen lately, while the Fed was providing a lot of certainty around interest rates. Since changing their chance to neutral, data in general will have slightly less impact. Here's how gold and the US dollar reacted last month.
Outlook
As always, heavy volatility is expected. The market is pricing in a rate cut by the September FOMC meeting. Even though the Fed is sticking with its nuetral stance on rates, there's some risk in weaker than expected data triggering the pricing in of an earlier rate cut. Here's the outlook for rate probabilities for September per the CME's FedWatch tool:
As shown in last month's impact, there could ample opportunity to get into a trade after a trend emerges. Trading prior to the releases or on any knee-jerk reaction is too risky. NFP and hourly earnings are the ones to focus on. The unemployment rate shouldn't have too much impact at all, unless it beats estimates. Also, don't forget this release is very susceptible to revisions which can sometimes cause a whipsaw.
Caution is always advised. Good luck out there!
We must learn who is gold, and who is gold plated
Unemployment Claims is scheduled for tomorrow morning... Just for fun, I ran the Unemployment Claims timeseries through a few forecasting functions in R. Here were the results:
I wouldn't recommend trading on any of these. They're just based on the historical trend so they're not particularly sophisticated. Still, I'll be interested to see which one comes closest.
forecast_holt
Forecast Lo 80 Hi 80 Lo 95 Hi 95
206953.6 188037.8 225869.4 178024.4 235882.8
forecast_holt_damp
Forecast Lo 80 Hi 80 Lo 95 Hi 95
207547.1 188637.7 226456.4 178627.7 236466.4
forecast_ses
Forecast Lo 80 Hi 80 Lo 95 Hi 95
207548.1 188666.5 226429.8 178671.1 236425.1
forecast_naive
Forecast Lo 80 Hi 80 Lo 95 Hi 95
202000 182470.5 221529.5 172132.2 231867.8
I wouldn't recommend trading on any of these. They're just based on the historical trend so they're not particularly sophisticated. Still, I'll be interested to see which one comes closest.
Self-sufficiency is the greatest of all wealth. - Epicurus
Unemployment Claims is scheduled for tomorrow morning... Just for fun, I ran the Unemployment Claims timeseries through a few forecasting functions in R. Here were the results: forecast_holt Forecast Lo 80 Hi 80 Lo 95 Hi 95 206953.6 188037.8 225869.4 178024.4 235882.8 forecast_holt_damp Forecast Lo 80 Hi 80 Lo 95 Hi 95 207547.1 188637.7 226456.4 178627.7 236466.4 forecast_ses Forecast Lo 80 Hi 80 Lo 95 Hi 95 207548.1 188666.5 226429.8 178671.1 236425.1 forecast_naive Forecast Lo 80 Hi 80 Lo 95 Hi 95 202000 182470.5 221529.5 172132.2 231867.8 I wouldn't...
Self-sufficiency is the greatest of all wealth. - Epicurus
- Joined May 2019 | Status: iTrade | 1,427 Posts
{quote} When I started checking sensitivity of NFP data in 2017-18, average hourly earning turned out to be the winner. It make sense which is directly will impact the spending power. Do you have same observation?
We must learn who is gold, and who is gold plated
- Joined May 2019 | Status: iTrade | 1,427 Posts
The G7 finance ministers and central bankers are holding a conference call tomorrow to discuss the coronavirus. It's going to be a big market mover. While there's no sign that central banks are planning any coordinated intervention, they will likely send signals that easing is coming.
Currently, the markets are pricing in a 100% chance the Fed lowers rates by 50 basis points at the next meeting in March. 
Currently, the markets are pricing in a 100% chance the Fed lowers rates by 50 basis points at the next meeting in March.
We must learn who is gold, and who is gold plated
- Joined May 2019 | Status: iTrade | 1,427 Posts
WOW. Fed cuts rate at an unscheduled meeting by 50 basis points! First time they've taken that kind of aggressive action since the financial crisis. I'm wondering what the CME FedWatch tool is going to change to.
We must learn who is gold, and who is gold plated