Given that the Non-Farm Payrolls data for October will almost certainly, never see the light of day, market participants are being forced to look elsewhere for clues about the health of the US labour market and best calibrate their financial models accordingly.

The once severely overlooked, JOLTS and ADP non-farm employment prints, have now turned out to be the most prominent sources of data for traders, acting as the next two best options for getting a glimpse on US employment trends.

For September’s JOLTS jobs openings announcement later today, traders in favour of cuts will seek to see a number south of 7.2m to safeguard their convictions and for ADP’s non-farm employment change print, markets expect that the US economy only added 19k jobs in November, down from last month’s 42k addition.

We have to note that, September’s delayed NFP print has paradoxically turned out to be much more potent than markets anticipated, showcasing that the US labour market remains resilient, despite undergoing a so called “underperforming” phase. The US economy managed to add 117k new jobs in the reported period, exceeding estimates of 50k new additions. The dollar strengthened on the back of this data.

Odds for a 25bps rate reduction from the Federal Reserve at the December meeting have now reclaimed the 85% level, after facing severe depletion amidst the longest US government shutdown (fell as low as 30%) as traders remain convinced that rates at 4% are not sustainable and will inadvertently place unnecessary pressure on US households and also possibly causing undue harm on the wider US economy.

The key data point that would, ultimately, influence the most, policymakers’ assessments at next week’s policy meeting is nevertheless the upcoming PCE update coming up this Friday. The core PCE reading, is the Federal Reserve’s preferred gauge of inflationary pressures and should there be a surprise acceleration of price pressures in the US economy, odds for a rate cut may face dilution once again. Under this scenario, the greenback may receive inflows on prospects for the prolongment of the current policy regime at the same levels, which would in turn place pressure on both equities and gold.

Technical Analysis

XAUUSD Chart – Gold futures pullback after climbing close to November highs as trade profit activity rises

Resistance: 4250 (R1), 4360 (R2), 4450 (R3)
Support: 4130 (S1), 4030 (S2), 3920 (S3)