Investors will be watching for the US payroll data later in the day to confirm whether the U.S. economy is indeed in trouble.
A disappointing ADP report on Wednesday added to the gloom while the end of the fiscal stimulus has not helped the situation. Programs to help businesses pay wages have either lapsed or are on the verge of ending. A $600 weekly unemployment supplement expired in July.
The NFP report could add pressure on the White House and Congress to restart stalled negotiations for another fiscal package.
Nonfarm payrolls likely rose by 1.4 million jobs last month, with some of the anticipated gains coming from hiring for the 2020 Census. Employment increased 1.763 million in July and its growth peaked at 4.791 million in June.
The unemployment rate is forecast to have dropped to 9.8% in August from 10.2% in July, according to the Reuters survey. That would leave it just under the 10% peak shortly after the end of the 2007-09 Great Recession.
But the measurement of the jobless rate has been biased downward by people misclassifying themselves as being “employed but absent from work.” At least 29.2 million were receiving unemployment benefits in mid-August.
Average hourly earnings are forecast unchanged in August after rising 0.2% in July. That would lower the annual increase in wage to 4.5% from 4.8% in July.
The service sector is likely to account for most of the anticipated gains in August. Manufacturing is expected to have added another 50,000 jobs. Government payrolls were likely boosted by the hiring of at least 250,000 workers for the population count.
START TRADINGForex – US Payroll data to add to the economic gloom
Forex markets were on edge at the possibility of a slowdown in hiring. The pound, euro and New Zealand dollar are all down versus the U.S. dollar by 0.5% this week – the pound’s biggest weekly fall since mid-June.
The greenback set for the biggest weekly rise in nearly four months on tech selloff. The dollar’s bounce this week comes after weeks of losses which saw the greenback fall to an April 2018 low of 91.74.
The dollar index was trading at 92.774 in early London trading. On a weekly basis, it was up 0.6%, its biggest weekly rise since mid-May.
Elsewhere, the Japanese yen was steady at 106.14 per dollar.
The Australian dollar steadied at $0.7277, supported after local retail sales accelerated in July.
The euro seems to have eased its slide for now, and last sat at $1.1839. The common currency has fallen from a 28-month peak above $1.20 on talk the European Central Bank is concerned about its strength.
Sterling erased some losses against the euro on Friday but held near recent lows versus the dollar. Uncertainty around Brexit weighed on the pound, which is expected to weaken further into the end of the year.
On Friday, the pound was up around 0.2% versus the euro at 89.1 pence per euro at 0752 GMT. The British currency set for its smallest weekly change so far this year.
In commodity markets, oil was headed for its largest weekly drop since June amid worries about demand. Brent crude futures were flat at $44.07 a barrel and U.S. crude was also trading sideways $41.38 a barrel.
Gold added 0.3% as investors sought out the safety of the precious metal ahead of the US Payroll data.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money