Market Focus on U.S. Department of Labor’s Annual Revision: Impact on USD/JPY
As attention centers on the U.S. Department of Labor’s annual revision, the Bureau of Labor Statistics (BLS) will release the preliminary benchmark revision later today. There is widespread speculation that this revision could lead to a significant downward adjustment in employment numbers through March 2024, potentially fueling expectations for substantial rate cuts.
Major financial institutions have varied predictions. Goldman Sachs anticipates a downward revision of between 600,000 and 1 million jobs, while Wells Fargo expects at least a 600,000 reduction. On the other hand, JPMorgan Chase has a more conservative estimate of 360,000. Given these differing views, market volatility is expected ahead of the announcement.
The usual non-farm payroll data is based on estimates, but this revision is derived from the “Quarterly Census of Employment and Wages (QCEW),” which covers 95% of all employees through weekly unemployment insurance tax data. With wide-ranging forecasts and discrepancies in previous revisions, USD/JPY and other markets are likely to experience nervous movements leading up to the announcement.
In particular, if the revision shows a reduction of around 1 million jobs, the average monthly employment growth through March 2024 would be revised to 158,000. This could lead to increased expectations for significant rate cuts, driving the dollar lower. USD/JPY could drop from the 144 yen level and even test the 143 yen range.
Conversely, if the revision is smaller than expected, there is a risk of a sudden shift to dollar buying. Additionally, the fact that former President Donald Trump has commented on the revision in relation to his election campaign could add to the market’s nervousness.
Today’s annual revision from the U.S. Department of Labor is the main focus, and I plan to carefully monitor the USD’s movement in response to the results.
