Upcoming US JOLTS Report: Federal Reserve Doves Hope for Job Openings Decline
 |
| Upcoming US JOLTS Report: Federal Reserve Doves Hope for Job Openings Decline |
- Federal Reserve officials are closely monitoring the JOLTS report in anticipation of the July jobs data release.
- Economists predict a decline in job openings to around 9.6 million for June.
- Despite the Fed's rate hikes, the US labor market continues to exhibit imbalanced conditions.
On Tuesday, August 1, the US Bureau of Labor Statistics (BLS) is set to release the Job Openings and Labor Turnover Survey (JOLTS) report. This eagerly awaited publication will unveil the fluctuations in job openings during June, along with the data on layoffs and quits.
Market participants and Federal Reserve policymakers will closely analyze the JOLTS data, recognizing its potential to offer valuable insights into the intricate dynamics of labor market supply and demand.
What can we anticipate in the upcoming JOLTS report?
Anticipated drop in job openings expected from 9.8 million in May to 9.6 million in June, with both hires and separations remaining relatively steady at 6.2 million and 5.9 million, respectively, according to the BLS data.
For all latest news, follow Top Headline News Google News channel
The Federal Reserve (Fed) closely monitors job openings data to evaluate the supply-demand balance. In June, the BLS reported over 5.9 million unemployed, and Fed Chairman Jerome Powell noted some signs of improved labor supply and demand balance but still with demand surpassing supply. If June's job openings decline as projected, it could mean 1.6 jobs per unemployed.
Fed officials worry that the slow recovery in the labor market's supply side may lead to increased wages, making it challenging to control inflation.
FXStreet Analyst Eren Sengezer emphasizes the significance of JOLTS Job Openings data and potential market reactions, with a decline below 9 million openings possibly leading to USD selling pressure, while an increase toward 10 million would signal tight labor market conditions and impact the currency's performance against major rivals.
At what time will the JOLTS report be published, and what potential impact might it have on EUR/USD trading?
Scheduled for Tuesday, August 1, at 14:00 GMT, the release of job openings data bears significance for EUR/USD action as it may impact the market's perception of the Fed's rate outlook. The Euro has been facing challenges against its counterparts, particularly after European Central Bank (ECB) President Christine Lagarde refrained from confirming a key rate increase in September.
Eren highlights crucial technical levels to monitor in the EUR/USD before the JOLTS data:
Early Tuesday saw EUR/USD dip below 1.1000, and the Relative Strength Index (RSI) on the daily chart dropped below 50, indicating a bearish sentiment. Key support lies at 1.0900 (100-day SMA), followed by 1.0800 (Fibonacci 61.8% retracement of the March-July uptrend) and 1.0740 (200-day SMA).
On the upside, if EUR/USD regains 1.1000, the next recovery targets are 1.1070 (20-day SMA), 1.1100 (psychological level), and 1.1150 (static level).
FAQs - About the United States Dollar
Frequently Asked Questions
What exactly does the term 'US Dollar' represent?
The United States Dollar (USD) serves as the official currency of the United States of America and is widely used in numerous other countries alongside their local currencies. Being the primary medium of exchange globally, it boasts a staggering 88% share in the total foreign exchange turnover, with an average of $6.6 trillion in daily transactions, as of 2022 records.
Post World War II, the USD replaced the British Pound as the world's dominant reserve currency. Previously, the US Dollar was backed by Gold, but the adoption of the Bretton Woods Agreement in 1971 marked the end of the Gold Standard era.
What is the influence of Federal Reserve decisions on the value of the US Dollar?
The dominant influence on the US Dollar's value is monetary policy, a responsibility entrusted to the Federal Reserve (Fed). With a dual mandate of maintaining price stability (controlling inflation) and promoting full employment, the Fed primarily relies on adjusting interest rates to achieve these objectives.
Whenever prices surge and inflation surpasses the Fed's 2% target, the central bank responds by raising interest rates, thereby bolstering the USD's worth. Conversely, when inflation drops below 2% or the Unemployment Rate surges, the Fed may opt to lower interest rates, putting downward pressure on the Greenback.
Explaining Quantitative Easing: Its Impact on the US Dollar?
In dire circumstances, the Federal Reserve has the option to employ quantitative easing (QE) and increase the supply of Dollars. QE is an unconventional policy tool used when the financial system faces a credit freeze due to banks' reluctance to lend to one another, fearing potential defaults.
It serves as a last resort when lowering interest rates alone won't yield the desired outcome. The Fed utilized QE during the 2008 Great Financial Crisis to address the credit crunch. This involves the Fed printing more Dollars and purchasing primarily US government bonds from financial institutions, often resulting in a weaker US Dollar.
What does Quantitative Tightening entail, and what impact does it have on the US Dollar?
Quantitative tightening (QT) refers to the Federal Reserve's strategy of ceasing bond purchases from financial institutions and opting not to reinvest the principal from maturing bonds in new purchases. This approach typically has a favorable impact on the US Dollar.
0 Comments