U.S. non-farm payrolls expected to slow to 194K

USD Ends the Week on the Back Foot As Unemployment Rate Jumps

Posted Saturday, March 11, 2023 by
Skerdian Meta • 2 min read

U.S. non-farm payrolls expected to slow to 194K

Markets are now trading central banks more than anything else, and with Powell leaving the monetary policy at the mercy of the economic figures, traders are overconcerned with every bit of employment and inflation data. The USD surged after Powell’s comments on higher interest rates in the region of 5.75%, but reversed lower after he said that the FED hasn’t decided on a 50 bps hike in March yet.

This week we saw a jump in the ADP employment figures on Tuesday and on Friday the non-farm payrolls report showed that the number of jobs added was higher than expected, which led to a small increase in the stock market. However, the report also revealed a jump in the unemployment rate, while wage growth was weaker than expected. As a result, the USD turned bearish and the market is now expecting the FED to only raise interest rates by 25 basis points instead of 50 bps.

FED Chair Jerome Powell had previously hinted at a 50 basis point hike, but later pulled back on that statement and emphasized that they will base the decisions on the economic numbers. Given the recent turmoil in the banking sector, some believe that the FED may be more cautious and not raise rates too quickly. There is also concern that the banking crisis, particularly the troubles faced by Silicon Valley Bank, may limit the FED’s ability to raise rates further.

Looking ahead, the FED “terminal top” for interest rates has been revised down from 5.68% to 5.38%. This suggests that the FED may not raise rates as high as previously expected, with some even speculating that the FED may eventually cut rates by 25 basis points.

Gold H4 Chart – The 20 SMA Stopped the Surge on Friday

Will the bearish momentum return after the failure at the 200 SMA?

Gold continued lower below $1,810 early in the week after the initial comments from Powell at the testimony in the US Congress, but started to reverse higher in the next day, and on Friday we saw a surge. But, the climb ended at the 200 SMA (purple) on the H4 chart at $1,867, where we decided to open a sell Gold signal.