- The US JOLTS data will be watched closely by investors ahead of the November jobs report.
- Job openings are forecast to edge lower to 9.3 million on the last business day of October.
- US labor market conditions remain out of balance as the Fed refrains from tightening policy further.
The Job Openings and Labor Turnover Survey (JOLTS) will be released on Tuesday by the US Bureau of Labor Statistics (BLS). The publication will provide data about the change in the number of job openings in October, alongside the number of layoffs and quits.
JOLTS data will be scrutinized by market participants and Federal Reserve (Fed) policymakers because it could provide valuable insights regarding the supply-demand dynamics in the labor market, a key factor impacting salaries and inflation.
What to expect in the next JOLTS report?
The number of job openings on the last business day of October is forecast to decline to 9.3 million.”Over the month, the number of hires and total separations changed little at 5.9 million and 5.5 million, respectively,” the BLS noted in the September report and added: “Within separations, quits (3.7 million) and layoffs and discharges (1.5 million) changed little.”
After declining steadily from 10.3 million to 8.9 million in the April-July period, job openings rose to 9.49 million in August and to 9.55 million in September. Meanwhile, Nonfarm Payrolls increased by only 150,000 in October. Since the release of the October jobs report on November 3, the US Dollar (USD) has been struggling to find demand, with the DXY USD Index losing 3% in November.
Markets are fairly certain that the Federal Reserve (Fed) will leave the policy rate unchanged in the last policy meeting of the year. According to the CME Group FedWatch Tool, investors are even pricing in a more than 50% probability that the Fed will lower the interest rate by 25 basis points as early as March.
FXStreet Analyst Eren Sengezer shares his view on the JOLTS Job Openings data and the potential market reaction:
“The previous two JOLTS Job Openings data surprised to the upside and pointed to tight labor market conditions. The disappointing October NFP reading, however, suggests that conditions may have loosened. In case the number of job openings declines below nine million in October, markets are likely to see that as a confirmation of a cooling labor market. Nevertheless, investors could opt to wait to see the November labor market figures before betting on further USD weakness. On the other hand, a reading close to 10 million could help the USD stay resilient against its rivals with the immediate reaction.”
When will the JOLTS report be released and how could it affect EUR/USD?
Job openings numbers will be published at 15:00 GMT. Eren points out key technical levels to watch for EUR/USD ahead of JOLTS data:
“The Relative Strength Index (RSI) indicator on the daily chart declined toward 50 and EUR/USD fell below the lower limit of the ascending regression channel on Monday. These technical developments point to a loss of bullish momentum but sellers could refrain from betting on an extended slide if the pair stabilizes above the 200-day Simple Moving Average (SMA), which is currently located at around 1.0820.
On the upside, 1.0900 (psychological level, lower limit of the ascending channel) aligns as immediate resistance. Once this level is confirmed as support, 1.1000 (psychological level, midpoint of the ascending channel) and 1.1050 (upper limit of the ascending channel) could be set as next bullish targets. If EUR/USD confirms 1.0820 as resistance, technical sellers could show interest. In this scenario, additional losses toward 1.0770 (100-day SMA) and 1.0700 (50-day SMA) could be seen.”
(Former versions of this story said that job openings were expected to decline to 9.35 million in October. This figure has been changed to 9.3 million due to consensus change.)
Economic Indicator
United States JOLTS Job Openings
JOLTS Job Openings is a survey done by the US Bureau of Labor Statistics to help measure job vacancies. It collects data from employers including retailers, manufacturers and different offices each month.
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022.
Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates.
When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system.
It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
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- Source: https://www.fxstreet.com/news/us-jolts-preview-job-openings-expected-to-decline-to-still-high-935-million-in-october-202312050800
