The headline NFP number for September was marginally weaker at 136K vs the 145K expectation. However, with the revision to August’s number from 130K to 168K, the overall headline number will be looked at as slightly better than expected. The headline NFP Payroll number itself should not sway the Fed in their decision to cut rates on October 30th. The unemployment number dropped to 3.5% in September from 3.7% in August.
However, the Average Hourly Earnings (MoM) dropped from 0.4% in August 0.0% in September, vs an expectation on 0.3%. This is a huge miss and will heighten the Fed’s awareness to a slowdown in inflation over the month. The FOMC meets again on October 30th. In theory, lower inflation would lead to a lower US Dollar, which would lead to more rate cuts.
Immediately after the release of the data S&Ps spiked higher, mostly likely a “relief rally” from 2900 to near 2020. Given all the poor data released this week, the market is content to have a number that is inline/slightly better. S&PS are closing in on the 50% retracement at 2925 from the Oct 2nd high to yesterday’s lows. Support is at today’s lows of 2896.75. Next support is yesterday’s lows at 2855.
Source: Tradingview, City Index, CME
USD/JPY also spiked after the data release, possibly also on a relief rally. However, on a 240-minute chart, one can see that a double top has been formed, with the neckline broken near 107.05. This breakdown has failed for the moment, as horizontal support was held at 106.68. However, a break below this level may confirm the next move lower. To find the target for a double top, take the distance of the high to low between the 2 highs, and add it to the breakdown point. The target in this case is near 105.45
Source: Tradingview, City Index
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.