The number of job openings on the last business day of July stood at 8.82 million, the US Bureau of Labor Statistics (BLS) reported in the Job Openings and Labor Turnover Survey (JOLTS) on Tuesday. This reading followed 9.16 million (revised from 9.58 million) openings in June and came in below the market expectation of 9.46 million.

“Over the month, the number of hires and total separations changed little at 5.8 million and 5.5 million, respectively,” the BLS further noted in its publication and added: 

“Within separations, quits (3.5 million) decreased, while layoffs and discharges (1.6 million) changed little.”

Market reaction

The US Dollar came under selling pressure with the immediate reaction and the US Dollar Index turned negative on the day below 104.00. 

US Dollar price today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the New Zealand Dollar.

USD   -0.18% -0.11% 0.06% -0.25% 0.06% -0.47% -0.27%
EUR 0.19%   0.06% 0.24% -0.08% 0.23% -0.28% -0.09%
GBP 0.06% -0.06%   0.17% -0.22% 0.20% -0.41% -0.18%
CAD -0.11% -0.25% -0.17%   -0.34% 0.01% -0.61% -0.32%
AUD 0.27% 0.09% 0.18% 0.33%   0.31% -0.27% -0.03%
JPY -0.11% -0.30% -0.24% -0.06% -0.39%   -0.58% -0.39%
NZD 0.46% 0.34% 0.35% 0.53% 0.27% 0.57%   0.24%
CHF 0.21% 0.09% 0.16% 0.33% 0.01% 0.34% -0.19%  

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).

This section below was published as a preview of the JOLTS Job Openings data at 09:00 GMT.

  • JOLTS report will be watched closely by Fed officials ahead of August jobs data.
  • Job openings are forecast to decline to 9.46 million on the last business day of July.
  • US labor market conditions remain out of balance despite Fed rate hikes.

The Job Openings and Labor Turnover Survey (JOLTS) will be released on Tuesday, August 29, by the US Bureau of Labor Statistics (BLS). The publication will provide data about the change in the number of job openings in July, alongside the number of layoffs and quits.

JOLTS data will be scrutinized by market participants and Federal Reserve 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 July is forecast to decline to 9.46 million from 9.58 million in June. “Over the month, the number of hires and total separations decreased to 5.9 million and 5.6 million, respectively,” the BLS  noted in June’s JOLTS. “Within separations, quits (3.8 million) decreased, while layoffs and discharges (1.5 million) changed little,” the publication further read.

The Federal Reserve (Fed) has been paying close attention to the job openings data to assess whether the equilibrium between supply and demand in the labor market remains out of balance. In June, the BLS reported that there were more than 5.95 million people unemployed. Hence, the ratio of available jobs to job seekers stood at around 1.6. In July, the number of unemployed declined slightly to 5.84 million. Even if the number of job openings were to decline to 8.76 million in July, that would still result in 1.5 available jobs for each unemployed.

“Job openings have declined substantially without increasing unemployment –a highly welcome but historically unusual result that appears to reflect large excess demand for labor,” said Federal Reserve Chairman Jerome Powell in his speech at the Jackson Hole Symposium on Friday. Powell further added that the Fed expects the rebalancing in the labor market to continue, but noted that it would call for a policy response if they were to see evidence that “the tightness in the labor market is no longer easing.”

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

“Market participants are fairly certain that the Fed will leave its policy rate unchanged at its September meeting. They are, however, yet to decide whether the Fed will raise the policy rate again before the end of the year. According to the CME Group FedWatch Tool, the probability of the Fed lifting the interest rate by another 25 basis points in 2023 holds at around 50%.”

“If there is a significant decline in the number of job openings, with a reading below nine million, the US Dollar (USD) could come under renewed selling pressure. On the flip side, an increase toward 10 million would reaffirm tight labor market conditions and have the opposite impact on the currency’s performance against its major rivals.” 

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

Job openings data will be published on Tuesday, August 29, at 14:00 GMT. The report could influence the action in EUR/USD due to its potential impact on the market pricing of the Fed’s rate outlook. The Euro has struggled to stay resilient against its rivals after European Central Bank (ECB) President Christine Lagarde refrained from confirming one more increase in key rates in September.

Eren points out key technical levels to watch for EUR/USD ahead of JOLTS data:

“EUR/USD trades near the upper limit of the descending regression channel coming from July and the Relative Strength Index (RSI) indicator on the daily chart stays near 40, reflecting the bearish bias.”

“The 200-day Simple Moving Average (SMA) aligns as a key pivot level for EUR/USD at 1.0800. If the pair stabilizes above that level, sellers could be discouraged. In that scenario, 1.0900 (psychological level) could act as interim resistance ahead of 1.0930 (100-day SMA) and 1.0970 (50-day SMA). On the downside, 1.0750 (lower limit of the descending channel, static level) could be seen as the next bearish target followed by 1.0700 (static level, psychological level) and the 1.0635 seen on May 31, if buyers give up on defending 1.0800”.

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.

This article was originally published by the original article here.