U.S. Non-Farm Payrolls may be better than expected

Markets came fragmented just before the Non-Farm Payrolls report due to be released on Friday. Stocks are rising along with a strengthening U.S. Dollar. The safe haven role of the Dollar was revised as investors are assured the $1.9 trillion relief bill would pass.

U.S. Treasuries yields resumed climbing, from 1.11% to 1.15%, rising chances for a tight monetary policy from the Fed to arrive earlier than expected 2023 deadline.

U.S. stock markets turned positive reclaiming losses of the previous week. The S&P 500 broad market index rebounded to all-time highs at 3840 points, not least due to the excellent quarter reporting of Alphabet and Amazon. Both tech giants beat forecasts of revenue and profit. Vaccination in the United States has achieved robust pace as number of vaccinated outperformed new infections.

Brent crude prices are close to the important psychological landmark of $60 per barrel thanks to the crude reserves data that were much better than expected. U.S. Energy information administration has reported a significant decline in crude reserves and OPEC is now forecasting lack of crude supply in 2021. Despite a sharp rise of crude prices this week it won’t last long and we may expect them to tumble soon.

Gold prices is losing its glance as an investment shelter and dropped below $1800 per troy ounce amid rising U.S. Treasuries yields. Still, a technical picture of a further decline to $1650-1700 is not clear yet.

The Euro dipped below weekly support level of 1.20000 vs the Greenback. The cable in the opposite managed to hold at the support level of 1.36500 after Bank of England hawkish statements. The Japanese Yen reached its strong resistance level at 105.6 vs the Dollar.

Investors decided to take a breather after a turbulent trading to prepare for the major event of this week – U.S. Non-Farm Payrolls report. Consensus forecasts are looking more neutral with unemployment at 6.7% and new non-farm jobs at 50,000 with average hourly earnings to rise by 0.3%.

We suggest U.S. labor market would perform better than expected with 116,000-170,000 new jobs, unemployment at 6.5% and higher rise of average hourly earnings as labor spending performed a rise by 6.8% vs minus (-7.0%) a month before.