The Fed still has time to observe the dynamics of employment

The statistics on the labor market published in the US turned out to be quite contradictory. On the one hand, the published data, including statistics on the growth rates of wages in July, coincided with market expectations (an increase of 2.7% year-on-year). But the data on unemployment and the number of jobs created outside the agricultural sector, diverged with market expectations. The unemployment rate in the US in July fell below 4% of the working-age population and was 3.9%. To a record low of May 2018 (3.8%), unemployment this time did not reach, but is already approaching this level, and the US economy - to full employment.
As for the number of new jobs outside agriculture, their number in July was 157 thousand, which is 17% below market expectations. In principle, this meaning can be further clarified or revised by the US Department of Labor, however, it may be that the dynamics of this indicator may again postpone the increase in the interest rate in the United States. It is usually believed that an increase of this figure by 200 thousand jobs a month adds about 3% to the US GDP. Now the growth was much less.
Fed noted that when deciding on the interest rate, inflation indicators and labor market conditions are necessarily taken into account. It's not excluded that at the next meeting the Fed can again postpone the decision to raise the interest rate, if this indicator of the labor market will again grow at such a low pace. However, it is possible that this is a temporary phenomenon, most likely related to seasonal factors, this indicator has a property to fluctuate strongly from month to month, so the Fed has time to observe the dynamics of employment and assess the state of the labor market.

More new jobs and higher unemployment in the United States

The newly created jobs in the United States surprised the analysts happily, rising to 213,000 in the past month, or more than the average expectations of 200,000 new jobs.
What disappointed investors, however, was the unemployment figures. Instead of keeping at 3.8%, as expected, unemployment rose to 4%.
The other disappointing figures in the report were those of raising average hourly wages. The index grew by 0.2% on a monthly basis and 2.7% on an annual basis in June, against expectations of an increase of 0.3 and 2.8%, respectively.
All this has made investors take a step backwards in terms of forecasts of four US interest rates hikes this year after we've seen two. In other words, they can only expect another increase in interest rates this year.
The dollar has fallen sharply against other major currencies. The euro rose to 1.1750 levels after trading at levels of about 1.1700 previously.

The US economy has added 261,000 jobs

The newly created jobs in the world's largest economy amounted to 261,000 in October. At the same time, the unemployment rate fell again to 4.1%, according to data from the National Labor Office.
This is the lowest unemployment rate since December 2000.
However, the data proved to be slightly below average analysts' expectations. At the same time, employment figures for August were revised upwards from 169,000 to 208,000.
The September data also revised up to an increase of 18,000, compared with an initial decline of 33,000.
Analysts' average expectations were for 313,000 new jobs in October and unemployment rate at 4.2%.
October's pay growth is also disappointing. It turned out to be zero versus 2.4% in the previous month. This greatly reduces inflation expectations in the coming months as well as a December interest rate hike.

Gold down after NFP

Gold prices fell on Friday after a good report on employment in the US, which resurrected forecasts for another increase in the Fed's interest rate before the end of this year.
August gold futures settled at $1258.28 at the New York Exchange COMEX. For the week, gold fell by 0.8% for the first time in four recent weeks.
The forecast for a faster increase in the interest rate leads to a decrease in the price of gold, which is traded in dollars. With an increase in the cost of credit, companies' stocks become more attractive.
For this year, gold prices have risen by about 9%, in part because of forecasts that the Fed will tighten monetary policy gradually.

The dollar went up after the release of the US employment report

On Friday, the dollar moved up against other major currencies after a positive employment report allowed investors to forget about the continuing political tension in Washington.
On Friday, the US Department of Labor released a report on employment outside the agricultural sector, according to which 209,000 jobs were created in the US, which significantly exceeded the forecasts of experts of 183,000 jobs. The adjusted value showed that 231 thousand jobs were created in the US economy in June (the preliminary value was 222 thousand jobs).
After the value of 4.4% the unemployment rate in July fell to 4.3%, according to forecasts after a value of 4.4% in the previous month.
The average hourly wage in the US increased by 0.3% in line with the forecast and against an increase of 0.2% a month earlier.

Employment data in the US above expectations

The report of employment in the world's largest economy were well above analysts' average expectations. The newly created jobs were 211,000 in April, and the unemployment rate was 4.4%.
However, wage growth, at a 2.5% annual rate, was slightly below analysts' average expectations.
In any case, the data suggest that investors are likely to witness a June interest rate rise as well as at least one more to year-end.
The data showed that the US labor market recovered after much weaker results in March. A month earlier, only 79,000 new jobs were created.
The result also exceeded the average expectations of analysts predicting 190,000 new jobs in April.
Despite the good data, the euro appreciated against the dollar as it was close to cross the psychological limit of 1.1000, days before the presidential elections in France.
And while similar levels of euro against the dollar indicate expectations for a near-certain Macron victory, a surprise result in favor of Le Pen, according to analysts, could send the euro between 3 and 6% down on Monday.

The dollar was volatile against the yen after the US attacks on the Syrian airbase and NFP

The dollar fell in price against the Japanese yen on Friday morning after the US fired cruise missiles, striking at the airbase in Syria and provoking concern about the sharp escalation of the Syrian conflict.
President of the United States Donald Trump on Thursday said that he ordered to launch missile strikes on the Syrian airbase, with which a lethal chemical attack was carried out.
The dollar index to the basket of six major rival currencies by 6 am GMT fell by 0.08 percent to 100.59.
Against the yen, which traditionally grows during geopolitical tensions and risk aversion, the dollar sank by 0.3 percent to 110.45 yen.
However, after positive NFP dollar managed to climb to daily highs at 111.37.

Scotiabank: EUR/USD should stay above 1.0167 dollars

Despite the two-day rise in EUR/USD short-term technical indicators of the bank remain the sword territory. From there the pair have underestimated the possibility to develop upward correction, but doubted its continuation.
A return below 1.0485 dollars will return bears full control over the situation.
Calculations of the bank shows that EUR/USD should be worth in excess of 1.0167 dollars.
On Friday the euro lost some positions against the dollar after US NFP data showed, that the average hourly wages has grown unexpectedly.

The attractiveness of the British currency may rise

The dollar took a break again, going to the correction mode after Wednesday's rally. European currencies are trying to recover due to the increased interest in risk appetite following Wednesday's decision of OPEC to reduce production volumes, which triggered a 10% rally of oil prices.
Especially actively adjusted pair GBP/USD, which had reached a 3-week highs near 1.2660. After the breakdown of the upward movement of 1.26 quotes accelerated, and now the pound is trying to strengthen its position on the psychological level. The key growth driver for the British currency were the optimistic statements of the Minister of Brexit, which tried to weaken the market fears of a "hard Brexit". Players were particularly pleased with the comment that Britain can maintain access to the European single market after leaving EU. This is directly beneficial for the sterling as the British currency will return the attractiveness, shattered after the June referendum.
If we compare the EUR and the GBP, the position of pound look at this stage is much more stable. Status of the British economy, in spite of the "divorce" with the EU, so far eliminates the need for additional stimulus, and the negotiations themselves on an output from the block may last for quite a long period. The ECB, from the other hand, may be forced to extend the program of buying assets, especially in light of the increased political risk in the region.
However, the potential for further strengthening of GBP/USD looks limited due to the fundamental strength of the dollar. Today the US will publish key employment report, which is expected to increase jobs in the area of ​​170-180 (in my opinion higher than 200) thousand. If expectations are met, players will resume buying USD in anticipation of Fed rate increase at the next meeting.

New jobs in the private sector in the US rose in November

A research by the company Automatic Data Processing Inc. (ADP) reported an increase of 216 000 jobs created by private businesses in the US in November with average forecasts of financial markets for an increase of about 165 000. At the same time it was announced some downward revision of data for October, according to which private sector of the US economy were revealed 119,000 jobs during a previous assessment of the ADP of 147 000.
Yesterday's stronger than expected data suggest a pretty good rate of improvement in the labor market, even though the US economy is getting closer to achieving the so-called "Full employment", analysts say.
The ADP report is unlikely to lead to a substantial revision of forecasts of financial markets for upcoming on Friday an official report on employment in November, they added.
According to ADP small US companies with employees between 1 and 49 already for the fifth consecutive month are not a major generator of employment in November, as they had opened 37,000 jobs, medium-sized companies, employing between 50 and 499 people, were hired extra 89 000 workers, while large companies, employing more than 500 people have launched 90,000 new jobs.
The service sector added in the eleventh month of this year 228,000 jobs, in the manufacturing sector were cut 10 000 jobs, only within the industrial enterprises were laid off 10,000 workers, while in construction the number of jobs had increased by 2000, shows the latest survey of ADP.
Let me recall, that ADP surveys pretty much show what to expect from NFP on Friday. If their results are close to the real data, we can expect serious rise in dollar after this week's NFP.

How the employment report will affect the dollar?

In anticipation of today's release of the report on employment in the non-farm sector of the US, investors have started to fix profit on their long positions on the dollar. The release from positions has been associated with a weak index of manufacturing activity from the ISM, but today will be a tense day, so some traders also decided to reduce their dollar assets. Officials from the Federal Reserve made it clear, that the decision about raising interest rates in September will largely depend on today's labor market report. If the increase in the number of employees exceeds 200 thousand and the unemployment rate will remain unchanged or fall, expectations about rate hikes in the next month will increase, causing a full-scale dollar strenghtening, wich would bring USD/JPY at the highest level for the month. If the figures are quite high, USD/JPY could even reach 105. However, if the report disappoint, the dollar can meet a nasty correction after rising last month. Stronger than all the dollar would fall to the British pound and the New Zealand dollar - the two currencies, which showed particularly good results in the eve the publication of the report.

Fed's rates raising back on the agenda

In response to the unexpectedly strong data on US labor market, dollar strengthened against most of its competitors. The release can be called truly impressive. In July, the employment rate for payrolls, excluding the agricultural sector, increased by 255 thousand, against the expected growth by 180 thousand. At the same time the previous two indicators were revised upward, bringing the average for the last three months amounted to an impressive 190 thousand.
No less noteworthy was the component of the average hourly and weekly earnings, which J. Yellen gives great importance. The indicator rose to 2.7% y/y, reaching a maximum of more than one year level. The increase in earnings gives hope for acceleration of inflation in the country, which is the second reference point for the Fed in determining the course of monetary policy. Thus, Friday's statistics unit immediately gives two arguments in favor of the fact that this year the regulator can still decide to raise borrowing costs.
As expected, the pair EUR/USD, which was trading near 1.1150, has responded to the report, falling under the mark of 1.11. Reaching the 8-day low at 1.1050, the euro has lost more than one figure. To improve the technical picture EUR/USD is now required to return above the mark of 1.11.

ADP and Non-farm payrolls - what to expect on Friday?

Today in the United States came out data on the number of employees by ADP, which have purely prognostic value. According to these statistics, you can more accurately predict the next data on Non-farm payrolls, which will be released on Friday, and most often they exceed the ADP data by 30-40 percent. Forecast for ADP was 170 thousand, while the Non-farm are only 175 thousand. The real statistics exceeded expected - 179 thousand. It is easy to calculate, that according to the forecast by ADP, Non-farm will be released in the area of ​​220-250 thousand. And with this in mind, we can expect a significant excess of forecasts and, consequently, the volatility in the region of 100-150 points in pairs with the US dollar. Moreover, this volatility will be one-way, which is very convenient for trade "by hand", or with a slight indentation in the trade with pending orders.