The Job Openings and Labor Turnover Survey (JOLTS) will be released on Wednesday by the United States (US) Bureau of Labor Statistics (BLS). The publication will provide data about the change in the number of Job Openings in July, alongside the number of layoffs and quits.
Markets expect Job Openings to decline slightly to 7.4 million in July, compared to the 7.437 million in June. The JOLTS will be released a few days before another crucial labor report, the Nonfarm Payrolls data for August, due on Friday. The US BLS’s latest employment report showed that Nonfarm Payrolls rose by 73,000 in July, missing the market expectation of 110,000. Additionally, the BLS announced that the change in total Nonfarm Payrolls for May and June was revised down by 125,000 and 133,000, respectively.
JOLTS data is scrutinized by market participants and Federal Reserve (Fed) policymakers because it can provide valuable insights into the supply-demand dynamics in the labor market, a key factor impacting salaries and inflation. Job Openings have been declining steadily since reaching 12 million in March 2022, indicating a steady cooldown in labor market conditions. In January of this year, the number of Job Openings came in above 7.7 million before declining to 7.2 million by March. Since then, JOLTS Job Openings rose for two consecutive months, reaching 7.77 million in May, followed by a drop below 7.5 million in June.
What to expect in the next JOLTS report?
While speaking at the Jackson Hole Symposium on August 22, Fed Chairman Jerome Powell acknowledged that downside risks to the labor market were rising. “Tighter immigration has led to an abrupt slowdown in labor force growth,” Powell added. Similarly, San Francisco Fed President Mary Daly argued that they can’t wait for perfect certainty without risking harm to the labor market because it will take time before they know whether tariff-related price increases will be a one-off.
Following the dismal labor market report and dovish Fed comments, investors widely expect the Fed to cut the policy rate by 25 basis points (bps) at the September policy meeting, with the CME FedWatch Tool pointing to a nearly 92% probability.
Although the market positioning suggests that the US Dollar (USD) doesn’t have a lot of room left on the downside, a significant decline in Job Openings, with a reading at or below 7 million, could reaffirm worsening conditions in the US labor market and weigh on the USD with the immediate reaction. On the other hand, a stronger-than-forecast print is unlikely to alter market expectations of the policy outlook, limiting any potential positive impact on the USD’s performance.
Economic Indicator
JOLTS Job Openings
JOLTS Job Openings is a survey done by the US Bureau of Labor Statistics to help measure job vacancies. It collects data from employers including retailers, manufacturers and different offices each month.
Read more.
When will the JOLTS report be released and how could it affect EUR/USD?
Job Openings will be published on Wednesday at 14:00 GMT. Eren Sengezer, European Session Lead Analyst at FXStreet, shares his technical outlook for EUR/USD:
“EUR/USD faces a pivot level at 1.1670, where the 20-day and the 50-day Simple Moving Averages (SMAs) align. On the daily chart, the Relative Strength Index (RSI) indicator stays slightly below 50, highlighting a lack of directional momentum.”
“In case 1.1670 remains intact as resistance, technical sellers could be interested. On the downside, 1.1510-1.1500 (100-day SMA, round level) could be seen as the next support level before 1.1425 (Fibonacci 23.6% retracement of January-July uptrend) and 1.1200 (Fibonacci 38.2% retracement). Looking north, resistance levels could be spotted at 1.1720 (static level), 1.1800 (static level, end-point of the uptrend) and 1.1900 (static level, round level).”
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates.
When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money.
When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions.
The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system.
It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
