The U.S economy will be set alight this week with a full barrage of economic data while the world holds its breath while ballots are counted in the tightly contested Presidential election.

The votes are still being counted in this tightly contested Presidential race which has market participants on the edge of their terminals as the Trump campaign is doing better than expected.

Asian markets moved higher in a volatile session with the U.S Dollar and U.S 10-year Treasury yields on a roller-coaster ride. U.S Futures gained momentum after it became clear that the race to the White House might be tighter than everyone predicted.

Events leading up to the U.S. Non-Farm Payrolls (NFP) release on Friday the 6th of November 2020:

Wednesday, 4 November 2020:

U.S. ADP Non-Farm Employment Change

The ADP Non-farm Employment Change is expected to come in much lower than the previous month’s number at 650K and the data is expected today the 4^th of November 2020 at 15:15 SAST.

Chart - The U.S. ADP Non-farm Employment Change

Thursday, 5 November 2020:

U.S Jobless claims:

Initial Jobless Claims - The initial jobless claims have been trending lower over the last couple of months since those record jobless claims numbers in April 2020.

• The Initial Jobless Claims data is expected to continue to see lower claims and show initial jobless claims reduce to 732K and should be released on Thursday at 15:30 SAST.

Chart - Weekly U.S jobless claims

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Continuing Jobless Claims – Continued claims have also become a focal point of interest and measures how many unemployed individuals qualify for benefits under jobless insurance.

• The Continuing Jobless Claims data is expected to decline to 7.2 million. The claims data will be released together with the Initial Jobless Claims on Thursday at 15:30 SAST

Chart - Continuing Jobless Claims

FOMC Interest Rate Announcement - The Federal Open Market Committee (FOMC) is widely expected to keep the U.S Fed Funds Rate unchanged and keep the target rate at 0-25 basis points.

• The interest rate decision is expected at 21:00 SAST on Thursday followed by the FOMC press conference scheduled for 21:30 SAST.

Chart – U.S Fed Funds Rate

Non-Farm Payrolls (NFP) outlook

Jobs number:

The number of new Non-Farm jobs for October is expected to be slightly lower than the previous reading for September of 661K. 

• U.S Non-Farm Payrolls is expected to remain in positive territory at 600K employed for October 2020.

Hourly earnings:

The Average hourly earnings (M/M) data is expected to increase to 0.2% from the previous months 0.1%. The Average hourly earnings (Y/Y) for October is expected to see a slight decline to 4.6% from the previous months number at 4.7%

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 watched closely for signs of economic recovery and is expected to show a decrease to 7.7%.

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

U.S markets moved lower over the previous week as new coronavirus infections spread economic uncertainty across the globe. The Wall Street 30 is expected to remain volatile this week as votes come in ahead of the FED rates decision and Jobs report.

The price action moved to lower supported by volume as mentioned last week but rebounded and is firmly above the 27155-support level again after making a lower low. We are not out of the woods just yet as the price action needs to regain the 28957-price level to negate the downtrend.

Technical points to look out for on the Daily Wall Street 30:

• The WS30 needs to stay above the 27155-support level and preferably close above the 28957-price level to negate the downtrend formation.
• The 50-day SMA (blue line) is acting as resistance to price and will be watched closely.
• The Relative Strength Index (RSI) made another lower low and is still in a downtrend towards the oversold levels.
• Volume spiked as expected with the down move and has retreated from elevated levels.

Charting done on Metatrader5 GT247.com  - WallStreet30 Daily

Take note: The outlook and levels might change as this outlook is released during the current days (Wednesday the 4th of November 2020) 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)

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?

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 will be released locally on Friday the 6th of November 2020 at 15:30 SAST.

Sources – Reuters, MetaTrader5

Barry Dumas | Market Analyst at GT247.com

Barry has 12 years experience in the financial markets. He enjoys educating clients on trading / investing and providing punchy technical analysis on securities. He currently holds a Wealth Management qualification and is studying towards becoming a Chartered Market Technician® (CMT) designation holder.

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. Past performance is not necessarily an indication of future performance. The value of a financial product is not guaranteed. The value of a financial product can go down or up due to various market factors. The graphs are for illustrative purposes only.