Chapter 18 08/30 XAUUSD: U.S. Employment in August Was Weaker than Expected, and the Market Began to Focus on t
Abstract: The August employment report just released by Automatic Data Processing, Inc. (ADP) shows that the number of jobs is lower than the market expectation. Gold hit a three-week high after a series of U.S. economic data were slightly weaker than market expectations. The market is waiting for the August employment report released by the U.S. Department of Labor on Friday, highlighting the busy U.S. data week.
Fundamentals
August ADP private employment report in the U.S. showed that 177,000 new jobs were created, which was lower than the market expectation of 205,000 jobs. These data are usually regarded as the leading indicators of the non-farm payrolls report released by the Department of Labor, which depicts a subtle picture of the U.S. labor market.
By department, 23,000 new jobs were created in commodity production departments and 154,000 new jobs were created in service provision departments. According to the scale of enterprises, small enterprises added 18,000 jobs, medium-sized enterprises contributed 79,000 jobs, and large enterprises added 83,000 jobs.
The wage growth slowed down obviously, which aggravated the slight increase in employment. For those who stay in their current positions, the salary increase is 5.9% year-on-year, which is the lowest increase since October 2021. At the same time, the salary increase of job-hoppers slowed down to 9.5%.
Nela Richardson, chief economist of ADP, said, "This month's data is consistent with the rate of job creation before COVID-19." She said, "After two years of employment growth related to recovery, as the impact of the epidemic on the economy fades, we are moving towards a more sustainable growth in wages and employment.
Market observation: In recent years, there has been a debate in the economic circle around the "tension" of the labor market. In other words, if the labor force has too much "bargaining power", they can decide the price, which may bring upward pressure on inflation. However, measuring the labor market tension is not an accurate science, and there are many ways to measure the labor market tension.
The preferred measures are salary trends and employee resignation rate. In short, when workers have great bargaining power, they will transfer their jobs in exchange for higher wages. This forces employers to compete to retain labor, and this is usually consistent with the overheating of the economy.
In recent months, the trend of these two components of the labor market has become increasingly obvious, and there has been no tightening trend. In fact, they show that the economy is slowing down and returning to the weak growth trend before the COVID-19 pandemic.
We will get the latest data on hourly income this Friday, but the trend of last year is already obvious, that is, wages continue to slow down. The Fed is still uneasy about the level of wage growth, but it is moving in the right direction. However, salary is not always the best measure, because, like rent, labor contracts are usually negotiated once a year and are not updated in real time. This is why the resignation rate often takes the lead in the trend of wage growth.
Technical Analysis
Gold prices rose further on weaker-than-expected labor and consumer spending data for August. This suggests that high borrowing costs are having a greater negative impact on economic growth and reducing the attractiveness of the USD to investors.
Moreover, after testing the recent bottom at US$1,884, gold prices have gained significant technical improvement in the 1D timeframe, strengthening the near-term bullish bias. However, does this mean that the medium-term trend has begun to reverse? That may not be decided until tomorrow's close.
According to the time cycle, tomorrow the market will record a candlestick in the 1M timeframe. If the short-term surge in the gold price ends the month above US$1,966, it will mean that the medium-term trend has begun to reverse. Otherwise, the market will continue to be widely range-bound. It is recommended to set the foundation.
Trading Recommendations
Trading direction: Short
Entry price: 1958
Target price: 1898
Stop loss: 1976
Deadline: 2023-09-13 23:55:00
Support: 1933, 1924, 1912
Resistance: 1948, 1953, 1963
