Jerome Powell’s Speech, Chair of the Federal Reserve
Release Date: Monday, September 30
As data from the final quarter of 2023 suggested a decline in inflation, the tone of Federal Reserve officials shifted from contractionary to expansionary, with risk-taking replacing risk-aversion. This change was driven by expectations for interest rate cuts in 2024, with markets predicting up to six rate cuts by the end of the year, starting as early as January 2024. This soft landing scenario for the U.S. economy was a factor in the growth of stock indices, including the NASDAQ.
At the beginning of 2024, with a shift in U.S. economic data trends, inflation began to rise again. This development tempered the expectations for rate cuts by the end of 2024, which had formed in January, February, and March. Despite this adjustment, stock indices have remained at high levels without experiencing significant declines.
Despite the mismatch between interest rate expectations and stock market behavior, stock market participants remain hopeful for a reduction in inflation and subsequently a decrease in interest rates by the end of this year. This optimism has prevented heavy stock sell-offs, and stock indices have yet to show a notable negative reaction.
Jerome Powell, as the Chairman of the Federal Reserve, who controls short-term interest rates, has more influence over the value of U.S. currency than anyone else. Traders closely scrutinize his public commitments, as they are often used to provide subtle hints about future monetary policies.
But the big question remains: If the inflationary trend of the last quarter continues, do stock indices have room to grow, or will they give back their recent gains?
If interest rates are not reduced and Powell’s remarks remain aggressive, the value of the U.S. dollar will increase, while opposing currency pairs and gold will decline, and vice versa.
Manufacturing PMI Index
News release day: Tuesday, October 1
Based on data collected from monthly responses to questions posed to purchasing and supply managers in over 400 industrial companies, this report presents the percentage of respondents for each of the measured indicators (new orders, order backlogs, new export orders, imports, production, supplier deliveries, inventories, customer inventories, employment, and prices), as well as the net difference between the number of responses in a positive economic direction and a negative economic direction, along with the diffusion index. Responses are presented as raw data and never change. If the reported number is higher than expected, it should be seen as a positive/bullish sign for the U.S. dollar (USD) and a negative/bearish sign for opposing currency pairs and gold. Conversely, if the reported number is lower than expected, it is interpreted as a negative/bearish sign for the U.S. dollar and a positive/bullish sign for opposing currency pairs and gold.
JOLTS Job Openings Index
News release day: Tuesday, October 1
JOLTS (Job Openings and Labor Turnover Survey) defines job openings as all positions that are open (unfilled) on the last working day of the month. A job is only considered “open” if it meets three criteria:
- A specific position exists, and there is work available for that position.
- The job can start within 30 days, regardless of whether the business finds a suitable candidate in that time.
- There is active effort to recruit workers from outside the business for that position.
If the reported number is higher than forecasts, it is generally seen as supportive (bullish) for the U.S. dollar (USD) and bearish for opposing currency pairs and gold. If the reported number is lower than forecasts, it is typically viewed as negative (bearish) for the U.S. dollar and bullish for opposing currency pairs and gold.
ADP Non-Farm Employment Change Index
News release day: Wednesday, October 2
The ADP National Employment Report measures monthly changes in non-farm and private employment based on payroll data from approximately 400,000 business clients in the United States. This report, which is released two days before the government’s payroll data, serves as a good predictor for the government’s non-farm payroll report. Changes in this index can be highly volatile.
If the reported number is stronger than expected, it is generally viewed as a positive/bullish sign for the U.S. dollar (USD) and bearish for opposing currency pairs and gold. If the reported number is lower than expected, it is typically interpreted as a negative/bearish sign for the U.S. dollar and a bullish sign for opposing currency pairs and gold.
The Unemployment Insurance Claims Index
News release day: Thursday, October 3
Initial Jobless Claims measure the number of individuals who filed for unemployment insurance for the first time during the past week. This data is one of the earliest economic indicators in the United States, but its impact on the market varies from week to week.
If the reported number is stronger than expected, it is usually viewed as a negative/bearish sign for the U.S. dollar (USD) and a bullish sign for opposing currency pairs and gold. If the reported number is lower than expected, it is typically seen as a positive/bullish sign for the U.S. dollar and bearish for opposing currency pairs and gold.
Purchasing Managers’ Index (Services Sector)
News release day: Thursday, October 3
The ISM Non-Manufacturing Purchasing Managers’ Index (PMI) is a composite index calculated as an indicator of the overall economic condition for the non-manufacturing sector. A number above 50 percent indicates that the non-manufacturing economy is generally expanding, while a number below 50 percent indicates that it is generally contracting. The ISM non-manufacturing report is based on data collected from monthly responses to questions posed to over 370 purchasing and supply managers across more than 62 different industries, representing nine sectors from the Standard Industrial Classification (SIC). Membership in the business survey committee is diverse based on SIC categories and is based on each industry’s share of Gross Domestic Product (GDP).
If the reported number is stronger than expected, it is typically seen as a positive/bullish sign for the U.S. dollar (USD) and bearish for opposing currency pairs and gold. Conversely, if the reported number is lower than expected, it is usually interpreted as a negative/bearish sign for the U.S. dollar and a bullish sign for opposing currency pairs and gold.
Average Hourly Earnings (AHE) Index
News release day: Friday, October 4
Average Hourly Earnings measure the changes in the prices that businesses pay for labor and do not include agriculture. If the reported number is higher than expected, it is generally seen as a positive/bullish sign for the U.S. dollar (USD) and bearish for opposing currency pairs and gold. If the reported number is lower than expected, it is usually interpreted as a negative/bearish sign for the U.S. dollar and a bullish sign for opposing currency pairs and gold.
Non-Farm Payroll (NFP) Index
News release day: Friday, October 4
The ADP National Employment Report measures monthly changes in non-farm and private employment based on payroll data from approximately 400,000 business clients in the United States. This report, which is released two days before the government’s payroll data, serves as a good predictor for the government’s non-farm payroll report. Changes in this index can be highly volatile.
If the reported number is stronger than expected, it is generally seen as a positive/bullish sign for the U.S. dollar (USD) and bearish for opposing currency pairs and gold. If the reported number is lower than expected, it is typically interpreted as a negative/bearish sign for the U.S. dollar and a bullish sign for opposing currency pairs and gold.
Unemployment Rate Index
News release day: Friday, October 4
The unemployment rate is recognized as a key economic indicator that reflects the overall health of the economy. When the unemployment rate rises, it means that more individuals have lost their jobs, which can lead to reduced economic activity and decreased consumer demand. This situation usually results in a decline in the value of the country’s currency, as investors tend to move towards currencies with better economic performance. On the other hand, a decrease in the unemployment rate is seen as a positive sign of economic improvement, which can lead to an increase in the national currency’s value. In such cases, foreign investors tend to transfer their capital to the relevant currencies, which helps strengthen that country’s currency. If the unemployment rate is higher than expected, it is generally viewed as a negative/bearish sign for the U.S. dollar (USD) and a bullish sign for opposing currency pairs and gold. Conversely, if the reported number is lower than expected, it is typically interpreted as a positive/bullish sign for the U.S. dollar and bearish for opposing currency pairs and gold.