Is this the next cataylist for the "Sell-off"?
US Non-farm Payroll Data Poised To Disappoint?
Source: FN Arena News - March 09 2007
By Rudi Filapek-Vandyck
It is FNArena's impression that expert views have shifted towards a likely disappointing job creation figure later today in the US. Market consensus is that today's release of February non-farm payroll data in the US will deliver a net figure of 100,000 new jobs created outside the agricultural sector last month.
However, a number of market experts have been pointing out this week the consensus figure was trending downwards and likely to continue doing so. As we reported on Wednesday already (see Rudi on Thursday this week) economists at Goldman Sachs believed the number was likely to come out in the vicinity of 50,000 instead and therefore likely to disappoint heavily.
If Goldman Sachs' forecast proves correct, this may have ramifications for the direction of US equities, the greenback and Treasuries not only today but potentially for the near term.
US based trading guru Dennis Gartman weighed in on the argument yesterday with a "guesstimate" of 80,000 new jobs, which would likely be regarded as a disappointment by investors as well.
It would seem that the number of expert views in favour of a likely disappointing employment data release later today is still growing. In particular yesterday's release of a weaker than expected forecast for private employment payrolls in the US, the so-called ADP report, is seen as supporting the shift.
Yesterday's ADP report showed the net creation of 57,000 jobs in February, well below the average of 166,000 for the three previous months. As pointed out by experts, the ADP report has been generally effective in predicting whether non-farm payrolls would come in above or below consensus forecasts, rather than predicting the actual figure.
But there is no certainty about this as the ADP's January report was well out of line with the January non-farm payrolls, when the ADP came in at 152,000 from December's 118,000, while the January payrolls fell to 111,000 from 206,000.
A dismal non-farm payrolls figure is bound to put the US dollar, and likely the USD/JPY under renewed pressure. Experts are predicting the USD/YEN would target the 115 figure.
A major disappointment would also be regarded as an increased chance of a May Fed rate cut. As well, it would resurrect concerns of an emerging economic slowdown in the US, and thus likely provoke renewed sell-offs in global equities, according to experts.