The First Non-Farm Payroll. Table of Contents

The first Non-Farm Payroll in 2021

Tomorrow, Friday 5th the first Non-Farm Payroll number for the year will take place.

The US January employment report should garner extra attention given the likelihood that the $1.9 tln stimulus package in the US will be delayed until at least mid-March and have to be trimmed measurably.

The median forecast of economists polled by Reuters is for the Non-Farm Payroll to grow by 50,000, following the ADP number of 174,000 on Wednesday.

The range in the Reuters poll estimates varies from -250,000 to 400,000.

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What are the main market drivers?

Representatives of the US Democratic Party now officially dominate the White House and both houses of Congress.

Contrary to predictions, we have not yet seen the approval of a $1.9 trillion relief package stimulus for the economy.

Nevertheless, negotiations are still in progress, setting the stage for the bill to be signed sometime after March.

What to look out for?

The halting of new support measures and a rocky start to the vaccination process were probably the main reasons for pressure on risk assets at the end of January.

This trend is likely to continue into February.

What to expect from EUR/USD?

Starting January by updating 2-year highs, EURUSD ended last month with a 1% decline, reaching 1.2135.

As is often the case with the pair, early signs of a global market trend reversal were evident, as it formed the peak of 1.2350 as early as 6th-7th of January.

What to look out for?

The pressure on EURUSD is increasing along with the dollar’s recovery after a prolonged decline.

In the short term, the US currency could benefit from a broad support package from the US government or an increase in market volatility.

The opposite situation, accompanied by signs of new Fed policy easing, could push the dollar lower.

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What to expect from Gold?

After an initial jump to $1950 in early January, gold settled in the $1850 area by the end of the month, as the increase in US government bond yields and the strengthening of the dollar worked against it.

What to look out for?

Continuing to hover around these levels and lower could signal a break in the previous two years’ upward trend.

In February, it is worth paying attention to increased investor interest in silver and platinum, as further gains in these assets have the potential to push gold up.

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What to expect from Crude Oil?

Oil added over 8% in January, struggling to consolidate above $55 per barrel.

Such gains were supported by news of an OPEC+ production compromise in February and March, as well as signs of more robust demand from the US and other major consumers.

What to look out for?

In January, Brent prices peaked near $56, a level that acted as an important support in 2019 and 2020.

A break or rebound from this area would trigger a prolonged price movement towards a breakout.

It is also worth keeping an eye on Russia and Saudi Arabia’s statements on further plans for oil cuts.

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What to expect from S&P500

Markets were under severe pressure at the end of January, offsetting the previous few weeks’ gains.

Meanwhile, the pressure on blue chips intensified along with a substantial influx of retail investors who coordinated their follow-through via forums and social media.

What to look out for?

After a tumultuous rally since last November, the broader market seems to be teetering on the edge.

The questions now on the table are: Will there be enough support from buyers to keep pushing prices up? And will January’s short-squeezes in second and third-tier stocks threaten the entire retail boom of the past ten months?

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