Financial markets were little moved in the sub-session on Friday, with the dollar index hovering around 92.90. In the trading session, investors will focus on the U.S. non-farm payrolls report, which is expected to have a major impact on the dollar index. Major investment banks are now more optimistic about the U.S. non-farm payrolls report for March, with some forecasting a 1 million increase in non-farm payrolls. If the nonfarm report is stronger than expected, the dollar could rise, which could weigh on gold prices next week.
The Hong Kong Stock Exchange, the New York Stock Exchange, the Sydney Stock Exchange and several European bourses will be closed for Friday’s Good Friday holiday. CME’s precious metals and U.S. crude were suspended throughout the day, while ICE’s Brent crude contracts were suspended throughout the day. Trading in forex contracts closes at 23:15 Hong Kong time on Friday.
At 20:30 Hong Kong time on Friday, the US non-farm payrolls report for March is due and market analysts are expecting a big improvement in the US Labour market.
The jobs data is a leading indicator of consumer spending, which accounts for the bulk of overall economic activity. Nonfarm reports often cause big swings in financial markets.
U.S. nonfarm payrolls are expected to have increased by 650,000 in March from 379,000 in the previous month, according to the median forecast from economists polled by media.
This week’s “small nonfarm” data is good. The U.S. ADP added 517,000 jobs in March, the most since September, from an upwardly revised increase of 176,000. As a result, Friday’s non-farm payrolls report is likely to produce a similarly positive employment number.
ADP chief economist Nelarichardson said the labor market data for March showed a marked improvement, with the report showing the strongest growth since September 2020. Employment growth in the service sector was significantly higher than the recent monthly average, with leisure and hospitality sectors showing the most significant growth.
U.S. private employers added the largest number of jobs in six months in March as fewer new cases of COVID-19 fell, more businesses reopened and extended business hours, according to an agency review. The rise is a sign that the economy is recovering, boosted by a $1.9 trillion federal stimulus package.
Investment bank Barclays expects U.S. nonfarm payrolls to have increased by 900,000 in March, while the unemployment rate is expected to fall to 5.9 percent.
The bank cited several factors as evidence of strong employment expectations in March. The most important of these have been the decline in vaccinations and the number of confirmed cases of COVID-19, which has led states to relax restrictions. Progress on vaccinations may have helped drive an increase in hiring in February, a trend the bank suspects will improve further in March.
Analysts at J.P. Morgan pointed out that the U.S. economy is likely to have added 650,000 jobs in March, which will further confirm the strength of the economy and drive Treasury yields higher, pushing the dollar higher.
Economists at FXStreet expect nonfarm payrolls to have increased by 639,000 in March and the unemployment rate to fall to 6 percent.
Capital Economics expects U.S. nonfarm payrolls to have increased by 700,000 in March, with much of the increase reflecting a rebound in leisure and hospitality employment. It expects non-farm payrolls to accelerate in coming months as high-frequency indicators show activity continues to pick up and bailout cheques start to boost consumption.
Goldman Sachs estimates nonfarm payrolls rose by 775,000 in March, above the median market forecast, and the unemployment rate is expected to fall to 5.9 percent.
“The decline in Novel Coronavirus infection rates and the easing of commercial restrictions may have supported job growth in virus-sensitive sectors, particularly leisure and hospitality,” Goldman said. Big data jobs signals also point to a pick-up in job growth, and we expect favorable weather swings to support construction employment after February’s soft patch.”
TD Securities looks ahead to US non-farm data: forecast 1 million jobs added in March. Still, even with the big monthly gains, payrolls are likely to remain well below pre-pandemic levels for some time. By February 2021, there were 9.5 million fewer people in employment than there were in February 2020.