The job loss was -345,000. This was better than expected.
Today’s U.S. Unemployment Report will set the tone of the market today. Today’s Non-Farm Payrolls Report is expected to show the Unemployment Rate rose to 9.2%. The estimated job loss is 535,000. If the government added jobs then this number may dip under 500,000.
Anything under 500,000 would be bearish for the Dollar. A number over 550,000 will be bullish for the Dollar.
The major concerns among traders this morning are regarding the amount of jobs the government created and the historical move in the Unemployment Rate over 9%. Traders are also worried about the number of revisions to previous reports which have taken place. Because of the active revising by the government, there may be a two-side trade this morning. The first reaction will be to the actual number, and the second to the revision.
A number less the 500,000 is likely to turn traders bearish on the Treasury instrument as this news would indicate a possible bottom in the economy. A number greater than 550,000 will be a sign that the road to recovery will be rocky for the U.S. economy. The Treasuries would likely rally on a high number as investors would repatriate as they seek the safety of the Dollar.
A worse than expected Non-Farm Payroll number should put pressure on the equity indices. Stock traders are nervous and want to hear good news about the economy. If this report doesn’t deliver, then look for the start of a sharp break.
If fewer jobs were lost last month, then the equity markets will rally on the hopes that an improvement in the economy will lead to greater corporate profits down the road.
A stronger Dollar could lead to a sell-off in all commodity markets especially in gold and crude oil A weaker Dollar may attract enough buying in gold to push it above $1000 and crude oil above $70 per barrel.
Needless to say, following the initial violent action after the release of the report, the rest of the day’s activity is likely to be dictated by the results of this report.
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