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Bull-run for stocks cools ahead of US jobs data

If it’s the first Friday of the month, it’s US jobs data day. Ahead of the influential non-farm payrolls report, stocks are steady and the dollar is drifting.

Consensus forecasts are for the US economy to have added 183,000 jobs outside the agricultural sector in July. Analysts think any surprise is likely to be to the upside when the numbers are published at 1.30pm London time.

Says Simon MacAdam at Capital Economics:

We estimate that US non-farm payrolls rose by 200,000 in July. This should have been enough to push the unemployment rate back down to 4.3 per cent.

Meanwhile, although we have pencilled in a stronger 0.3% m/m gain in average hourly earnings, base effects probably dragged the annual growth rate back down to 2.4%. However, if the unemployment rate continues to fall, wage growth should come under some renewed upward pressure before long.

Deutsche Bank is already looking toward the jobs data due out in September for August. Says Brett Ryan, senior US Economist:

We should note that even if July payrolls are a bit below our forecast [of the addition of 200,000 jobs] Amazon’s hiring spree this month could result in an upside surprise when the August data are released on September 1.

Next month’s employment report will likely factor more prominently into the Fed’s decision process going into the September 20 meeting

The Federal Reserve keeps a close eye on job creation as it sets monetary policy, and wage growth has a significant influence over inflation, so the data can influence expectations for monetary policy.

In the meantime, the dollar index down 0.1 per cent at 92.71, taking it near its May 2016 low of 92.91. It has not traded under that level since January 2015.

The 10-year US Treasury yield is up 1bp at 2.226 per cent, however, having already dropped 5bp during Thursday’s session to a one-month low.

The euro is up 0.1 per cent at $1.1879, heading back toward Wednesday’s 30-month high of $1.1909. The pound is also up 0.1 per cent at $1.3148.

European equities are steady in opening trade, with the region-wide stocks 600 down 0.2 per cent overall. The FTSE 100 in London is flat and Frankfurt’s Xetra Dax 30 is down 0.2 per cent.

Asia-Pacific equities are mixed. Tokyo’s Topix index is down 0.2 per cent. The Shanghai Composite is down 0.4 per cent and South Korea’s Kospi is up 0.4 per cent.