The first Friday of the month is upon us with the Non-Farm Payrolls report. Once again, the key data point is wages. The Fed focuses on core inflation and a rise in this measure is basically impossible without Americans getting a raise.

We could see that again in the July 7th publication. Here is a preview:

Watch late wages reaction

In many of the previous releases, we have seen how markets initially reacted to the headline jobs number but then turned their attention to the wage data. The latter had the upper hand. In some cases, strong job gains of over 200K sent the dollar higher, only to fall sharply afterwards as wage data disappointed. And the drops continued, showing us that wages were the winners. We also had

In some cases, strong job gains of over 200K sent the dollar higher, only to fall sharply afterwards as wage data disappointed. And the drops continued, showing us that wages were the winners. We also had the opposite case:  a weak rise in jobs sent the dollar to lower ground only to bounce back up on a rise in wages. The “full employment” theory took over: employers are finding it harder to find employees, hence fewer job gains, and are willing to pay more, thus the wage gains.

June 2017 NFP

The report for June 2017 is published on 7.7.2017. Will the magic number of 7 make it special? Not really. But the reaction could be messy.

Markets are expecting 175K jobs gained, in line with the averages and above last month’s 138K. The initial reaction will come from this number but it is unlikely to last.

In order to have a significant reaction from jobs, they would either need to fall below 100K or jump above 250K. 

Yes, this is an extremely wide range, but wages matter more. Any number in between, which is very likely, would keep the focus on wages. Only a drop under 100K would have a long-lasting negative impact of its own. And only a gain of 250K or more would boost the greenback for a long time, regardless of wages. But these scenarios are unlikely.

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