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US JOLTS job openings data to test strength of labor demand

November 1, 2023| Forex Market


  • The US JOLTS report will be watched closely by investors ahead of the Fed’s policy announcements.
  • Job openings are forecast to decline to 9.25 million on the last business day of September.
  • US labor market conditions remain out of balance despite Fed rate hikes.

The Job Openings and Labor Turnover Survey (JOLTS) will be released on Wednesday by the US Bureau of Labor Statistics (BLS). The publication will provide data about the change in the number of job openings in September, alongside the number of layoffs and quits.

JOLTS data will be scrutinized by market participants and Federal Reserve (Fed) policymakers because it could provide valuable insights regarding the supply-demand dynamics in the labor market, a key factor driving up salaries and inflation. 

What to expect in the next JOLTS report?

The number of job openings on the last business day of September is forecast to decline to 9.25 million. “Over the month, the number of hires and total separations changed little at 5.9 million and 5.7 million, respectively,” the BLS noted in the August report and added: “Within separations, quits (3.6 million) and layoffs and discharges (1.7 million) changed little.”

After declining steadily from 10.3 million to 8.9 million in the April-July period, job openings rose sharply to 9.6 million in August. This unexpected increase, combined with the impressive 336,000 jump in Nonfarm Payrolls in September, highlighted that conditions in the US labor market remained relatively tight.

Although the revised Summary of Economic Projections showed in September that the majority of Fed policymakers saw it appropriate to raise the policy rate one more time before the end of the year. However, rising US Treasury bond yields since the September policy meeting revived expectations that the Fed could leave the policy rate unchanged in the 5.25%-5.5% range in 2023. According to the CME Group FedWatch Tool, markets are pricing in a 20% probability that the US central bank will hike the policy rate in December.

FXStreet Analyst Eren Sengezer shares his view on the JOLTS Job Openings data and the potential market reaction:

“JOLTS Job Openings data is usually published on Tuesdays. This time around, the data will be released on a Wednesday, after the ADP private sector employment report and just a few hours before the Fed’s monetary policy announcements. Moreover, the ISM will release the Manufacturing PMI report at the same time. Hence, the market reaction to job openings could remain short-lived and it might be risky to take a position based on this data alone.”

When will the JOLTS report be released and how could it affect EUR/USD?

Job openings data will be published at 14:00 GMT. Eren points out key technical levels to watch for EUR/USD ahead of JOLTS data:

“It will not be easy to navigate through all the data releases and investors are likely to wait for the Fed’s policy decisions before taking large positions. In any case, the 50-day Simple Moving Average (SMA) aligns as initial resistance at 1.0650 for EUR/USD before 1.0750 (Fibonacci 38.2% retracement level of the July-October downtrend) and 1.0800 (100-day SMA, 200-day SMA). On the downside, 1.0500 (psychological level) could be seen as first support ahead of 1.0450 (end-point of the downtrend) and 1.0400 (psychological level, static level).”

Economic Indicator

United States JOLTS Job Openings

JOLTS Job Openings is a survey done by the US Bureau of Labor Statistics to help measure job vacancies. It collects data from employers including retailers, manufacturers and different offices each month.

Read more.

Next release: 11/01/2023 14:00:00 GMT

Frequency: Monthly

Source: US Bureau of Labor Statistics

US Dollar FAQs

The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022.
Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.

The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates.
When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.

In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system.
It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.

Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.

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