The world's stock markets were on sale over the last two days as the downturn continues ahead of Jobs Friday. Today's pending economic data like jobless claims, U.S Factory orders, and ISM Non-Manufacturing PMI will be watched closely.

Market Outlook ahead of the U.S. Non-Farm Payrolls (NFP)

With the latest disappointing ISM Manufacturing PMI data sparking fears of a U.S economic slowdown, has seen the manufacturing hit lows last seen a decade ago. This time around, we see the U.S play catch-up with the rest of the world as Europe sits on the brink of Recession.

The manufacturing news raised new concerns for the U.S Dollar as this might prompt the Fed to act in easing rates further. The new Quarter is not off to a great start by any means as focus turns to the U.S-China trade negotiations again.

Events leading up to the Jobs report on Friday are:

U.S. ADP Non-Farm Employment change

The U.S. ADP Non-farm Employment Change is an excellent predictor of the Non-Farm Payrolls report as the ADP Non-Farm Employment Change measures the monthly change in non-farm, private employment.

The U.S. ADP Non-farm Employment Change is released two days ahead of the NFP jobs number. The ADP number was released on Wednesday at 14:15 SAST.

The change in private employment is slowing down slightly in September at 135K from the expected forecast number of 140K. All eyes will look to the comprehensive Non-Farm Payrolls report (NFP), especially wage growth numbers.

What is forecast this time for the Non-Farm Payrolls (NFP)?

Looking at the U.S. ADP Non-Farm Employment change, the number came in a bit light which begs the question of, how the Manufacturing sector is going to affect employment. We might see more pressure on the U.S economy if the Non-Farm Payrolls number disappoints significantly more than what is expected.

The Non-Farm Payrolls will be watched closely this time around and how it will impact the FED's decisions on interest rates for the rest of the year.

• Non-Farm Payrolls are usually reported on the first Friday of the month, whereby the number of additional jobs added from the previous month is released. The US Non-Farm Payroll number for the month of September will be released locally on Friday 4 October 2019 at 14:30 SAST.

Jobs number:

• The number of new Non-Farm jobs is expected to increase to 145K from the previous month's less than impressive 130K Non-Farm jobs.

Hourly earnings:

• The Average hourly earnings (M/M) number is expected to come in lower at 0.3% from the previous months, 0.4%. This is a crucial figure to watch, and if this number disappoints, it will signal a weak wage inflation outlook in the U.S. Take note that the Average hourly earnings will be watched closely once more as the wage growth rate has been subdued.

U.S. Unemployment Rate:

• The U.S. Unemployment Rate measures the percentage of the total workforce that is unemployed and actively seeking employment during the previous month. The U.S. Unemployment Rate is expected to remain unchanged at 3.7% unemployed.

Why is the jobs number important?

The Non-Farm Payrolls report (NFP) is treated as an economic indicator for people employed during the previous month, and the number being released will have a direct impact on the markets. In the United States, consumer spending accounts for most of the economic activity, and the Non-Farm Payrolls report represents 80% of the U.S. workforce. Farmers are excluded from the employment figures due to the seasonality in farm jobs.

Technical Analysis outlook on U.S. Indices for the U.S Non-Farm Payrolls (NFP):

Wall Street 30

The downturn continues after the false breakout on the Wall Street 30 as recession fears grow, which saw the three major U.S Indices lose over 1.5%. The trade war has shifted its sights to the EU as the Trump administration announced on Wednesday that the United States would impose tariffs on $7.5 billion of goods from the European Union.

Technical points to look out for on Wall Street 30:

• The price action has continued lower from the bull flag formation, which has negated the breakout to the upside.
• The Relative Strength Index (RSI) has moved towards the oversold level but can still go a long way into the oversold territory before price moves higher.
• The price action has also closed below the 50-day SMA, which signals more downside might be on the cards.

Source - Bloomberg

Take note: The outlook and levels might change as this outlook is released before NFP and before the current days U.S Market open.

What to trade internationally:

• Major indices to look at will be the S&P 500, Wall Street 30, Nasdaq 100
• Major Forex pairs to look at will be EUR/USD, GBP/USD and USD/JPY
• Commodity to look at will be Gold.

What to trade locally:

• Index to look at will be the ALSI
• Forex pair to look at will be the USD/ZAR
• Rand Hedges (BTI, CFR) and Rand Sensitives (Banks and Insurers)

How to trade the Non-Farm Payroll (NFP) report: The Strategies

There are many ways to trade the Non-Farm Payroll (NFP) report, and here are a few strategies traders look at:

• The Early birds: traders who will take an early position before the jobs number is released in anticipation that the directional movement the event will cause will be in their favour.
• The Scalpers: as the data is released, these traders will scalp and try and capitalize on the volatility that is created by the data, positively or negatively.
• The calm and calculated: as the market digest the results of the Non-Farm Payroll (NFP) report and after the volatility swings have occurred, these traders will take a position on the momentum of the market.

When and what time is the US NFP (Non-Farm Payroll) announced in South Africa?

4 October 2019 at 14.30 SAST.

Disclaimer:

Any opinions, news, research, reports, analyses, prices, or other information contained within this research is provided by Barry Dumas, Market Analyst at GT247 (Pty) Ltd t/a GT247.com (“GT247.com”) as general market commentary, and does not constitute investment advice for the purposes of the Financial Advisory and Intermediary Services Act, 2002. GT247.com does not warrant the correctness, accuracy, timeliness, reliability or completeness of any information which we receive from third party data providers. You must rely solely upon your own judgment in all aspects of your trading decisions and all trades are made at your own risk. GT247.com and any of its employees will not accept any liability for any direct or indirect loss or damage, including without limitation, any loss of profit, which may arise directly or indirectly from use of or reliance on the market commentary. The content contained within is subject to change at any time without notice.