FTSE to open flat as investors eye jobs data

<p>The FTSE 100 is set to open flat on Friday as investors await a raft of US jobs data out at 1.30pm London time. European […]</p>

The FTSE 100 is set to open flat on Friday as investors await a raft of US jobs data out at 1.30pm London time.

European markets suffered sharp falls in afternoon trading yesterday after Mario Draghi failed to announce any new stimulus measures to help ease the burden of indebted southern Europe. Whilst Draghi did hint towards potential moves to come over the next month or so, the market already had high expectations of an announcement in the ECB meeting yesterday, purely because of the strong rhetoric issued by Draghi last week when he said that the ‘ECB will do whatever it takes to preserve the euro’. It was this rhetoric that has triggered a 3.5% plus rally in the FTSE and broader European Indices over the past week and so as such, it was no surprise to see the markets reverse yesterday when that ‘whatever it takes attitude’ failed to transpire into hard action.

The focus of the market today will be on the US non-farm payrolls, private payrolls and unemployment rate. Both payroll measures are expected to grow from a disappointing set of jobs numbers in the previous month, with non-farm payrolls set to grow to 100,000 and private payrolls set to grow over 100,000 also. The US unemployment rate is expected to remain flat at 8.2%.

Importantly, however, today’s jobs numbers – from a markets perspective – are not just about the jobs, they are becoming more so about what implications they could have on the monetary policy of the US Federal Reserve. A stronger set of jobs numbers than expected could paint a slightly better picture of the US economy but at the same time, ease the pressure on the Fed to increase stimulus efforts. On the other hand, a weaker jobs reading – whilst being a disappointment – could increase optimism that the Fed is going to be forced to act sooner as opposed to later. The latter could potentially limit negative sentiment that a weak jobs reading normally triggers. Regardless, a weaker reading could be a double negative for the US dollar, as it would indicate a weaker than expected US economy and increase the potential for a third phase of quantitative easing by the Fed.

The US jobs data is released at 1.30pm.

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