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Get Ready for the NFP Report

Market’s attention will shift to the U.S. labor market tomorrow  with the government nonfarm payrolls report, and the weekly report on initial jobless claims. The government’s comprehensive job report is expected to say that employment growth in the nonfarm sector accelerated in August after July’s slowdown, rising by 190k compared to 157k in the previous month. As in previous NFP releases, markets will likely keep their eyes on the wage component as this is the leading indicator of US inflation. Should wages expand surprisingly by more than analysts believe, it will be good news for the dollar, but economists reckon that data will do little to change expectations that the Federal Reserve will hike interest rates two more times this year, with the next increase coming at the end of this month.

Another factor that will have significant impact on the markets is the threat of fresh U.S. tariffs on another $200 billion worth of Chinese goods.

China's commerce ministry warned that Beijing will be forced to retaliate if Washington implements new tariff measures. If China decides to impose tariffs on $60 billion of US imports, it will be bad news for the dollar.

The world's two largest economies have already applied tariffs to $50 billion of each other's goods.

 

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