Today's NFP release surprised the markets, as it came in at 156,000 against the forecast of 180,000. The poor August NFP Data ignites USD sell off. Will the other US data help USD to pull back some losses?
1 September, HotForex – The markets were hoping the recent strong ADP release (237K against the forecast 185K) would result in a strong NFP despite the lack of a direct correlation between the two. With Average Hourly Earnings also decreasing (to 0.1% from the previous 0.3%), it is evident that the lack of upward inflationary pressure will likely delay the Fed in hiking rates this year.
As a result, the poor August NFP data ignites USD sell off against its peers. Considering that the market saw that there is little value in holding the US dollar. The British Pound, Australian dollar and Canadian dollar, all benefited from the weak US job report.
How will the poor August NFP Data impact other US reports?
For the U.S. jobs data impact on other August reports, we expect a 0.3% personal income rise after a 0.4% July rise. We saw average gains of just 0.2% in Q2, a sturdy 0.6% in Q1 but 0.0% in Q4, as taxpayers push income into the 2017 tax year from Q4. We expect Q3 growth of 3.3% for total and 2.9% for disposable income, following respective rates of 3.0% and 3.5% in Q2. Industrial production is poised for a 0.6% August drop, with hits from factories and mining given hours-worked drops of 0.2% for factories and 0.1% for mining.
The headline decline mostly reflects a 4.5% utility output drop after an 11.4% five-month rise through July. We assume a 4% vehicle assembly bounce to a 10.7 mln rate. We expect a Q3 growth rate for industrial production of 0.6%, after rates of 5.2% in Q2, 1.6% in Q1, 0.7% in Q4, 0.8% in Q3, and declines in five of the six quarters before that.
ISM data helped USD to pull back some losses
U.S. ISM manufacturing index rose 2.5 points to 58.8 in August, much better than expected, after dipping 1.5 points to 56.3 in July. It was at 49.4 a year ago and it makes a new range high for 2017 (the 54.8 in April is the low). In fact, this is the highest print since April 2011. The employment component jumped to 59.9 from 55.2 and is the highest since mid-2011.
New orders dipped to 60.3 from 60.4. New export orders dropped to 55.5 from 57.5. Prices paid were steady at 62.0. The ISM data helps USD pull back some loses from the NFP misses. Still to come before the Labor Day holiday weekend the weekly USOil rig count and COT reports from the CFTC.
This article ‘Poor August NFP Data ignites USD sell off‘ was written by Stuart Cowell the Senior Market Analyst at HotForex. The provided article is a general marketing communication for information purposes only. It does not constitute an independent investment research. Nothing in this communication contains an investment advice or an investment recommendation. It also does not contain a solicitation for the purpose of buying or selling of any financial instrument.
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