NFP Preview: September US rate cut in the bag?

• Fed leaves rates unchanged but signals possible September cut
  

• Incoming US jobs report likely to shape expectations

• NAS100:  NFP sparked moves of ↑ 1.5% & ↓ 0.7% over past year

• Gold: ↑ 2% this week, ready to retest records?

• USDInd: Trapped in range, key levels – 103.65 & 104.70

With the Fed rate decision out the way, our focus shifts to Friday’s key US jobs report.

US rates were left unchanged yesterday, but Fed Chair Powell signalled that a cut could happen in September – depending on economic data.

This puts extra focus on the incoming NFP report which may shape bets around how many times the Fed cuts interest rates this year.

Markets expect the US economy to have created 175k jobs in July, compared to the 206k in the previous month while the unemployment rate is expected to remain unchanged at 4.1%.

Ultimately, further evidence of cooling labour markets may solidify expectations around the Fed making a move next month.

Traders have priced in a 25-basis point Fed cut by September with a 90% probability of another cut by November and 87% of a third cut by December!

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With all the above said, here are 3 assets that could be rocked by jobs report:

  1) NAS100 braced for triple-risk events

FXTM’s NAS100 could see heightened volatility on Friday due to not only the NFP report but also corporate earnings from Amazon and Apple.

The index staged a sharp rebound mid-week with prices challenging the 19500-resistance level.

• A solid set of earnings coupled with a soft jobs report could push the index higher.

• Should tech earnings disappoint or the jobs data print above forecasts, the NAS100 could fall.

Talking technicals..

• A breakout above 19500 could signal a move toward 20100.

• Should 19500 prove to be reliable resistance, prices could slip toward the 100-day SMA at 18800.

Golden nugget: Over the past year, the US jobs report has triggered upside moves of as much as 1.5% or declines of 0.6% in a 6-hour window post-release.

  2) Gold to retest record highs?

Gold is up roughly 2% this week despite kicking off Thursday’s session on a shaky note.

The precious metal remains supported by geopolitical risk and expectations around lower US interest rates. Given it’s zero yielding nature and sensitivity to US rate speculation, gold could see heightened volatility on Friday.

A soft jobs report is positive for the precious metal while a strong report could drag prices lower.

Focusing on the technical picture..

• Prices could rise toward the $2438.80 all-time high and beyond if $2425 proves reliable support.

• A breakdown below this level may open a path back toward the 50-day SMA at $2360 and 100-day SMA.

Golden nugget: Over the past year, the US jobs report has triggered upside moves of as much as 1.0% or declines of 0.8% in a 6-hour window post-release.

  3) USDInd waits on directional spark

It remains a choppy affair for the USDInd which is trapped within a range on the daily charts.

Bulls and bears are likely to remain entangled in a fierce tug of war until the scales of power shift in one direction. This catalyst could be on the incoming NFP report on Friday.

Support can be found at 103.65 and resistance at 104.70.

• A breakout above 104.70 may open doors towards the 50/100-day SMA at 105.20.

• Weakness below 103.65 could see a selloff to 103.27.