US November jobs report expected to show significant rebound

Rebound from natural disasters and strikes likely to impact data

The upcoming United States (US) employment non-farm payrolls report is expected to show 218,000 new jobs in November, a significant increase from October's 12,000 figure. The October US employment report faced disruptions from Hurricanes Helene and Milton, along with widespread industrial action.

The Bureau of Labour Statistics estimates that around 40,000 striking workers returned to their jobs in November. Several bank economists project this number to be higher, with between 50,000-60,000 jobs gained in storm-affected areas, contributing to their total forecast of between 200,000-250,000 new positions.

The combination of strike resolutions and storm recovery could create significant volatility in foreign exchange (forex) markets and other assets sensitive to employment data, such as the US stock market and the gold price.

Sector-specific expectations

• Non-cyclical sectors: including government, education, and health services are expected to drive hiring
• Manufacturing sector: employment should show improvement as strike impacts fade
• Transportation and warehousing sector: could surprise to the upside due to strong storage demand
• Retail sector: may see slower hiring due to the later timing of Thanksgiving and Black Friday.

Labour market conditions are an important factor for policymakers as they gauge the health of the economy and are directly related to inflation.

Federal Reserve implications

The Federal Reserve (Fed) faces its final meeting of 2024 with markets pricing a 74% probability of 25 basis point (bp) interest rate cut. The current Fed Funds rate target range stands at 4.50% - 4.75%.

November's consumer price index (CPI) data could influence the Fed's decision, as stronger-than-expected wage growth might cause the Fed to hold rates steady. The unemployment rate is forecast to remain steady from October at 4.1% while hourly earnings are predicted to rise 0.3% on a month-on-month (MoM), up from 0.4% in October.

US dollar index technical analysis

The US dollar index remains in a clearly defined uptrend, and only a fall through its late November low at 105.595 could lead to a consolidation phase. In such a scenario, the 105 region may be revisited. While the 200-day simple moving average (SMA) at 103.90 supports, the long-term uptrend remains intact.

A rise above the 108.07 November peak could lead to the 110.00 region being hit. Further up, the 114.745 September 2022 peak represents another possible upside target.

US dollar index daily chart

In US stock markets, they remain on a roll, continuing to hit new record highs ahead of Donald Trump’s presidency early next year, fueled by hopes for tax cuts and deregulation.

S&P 500 technical analysis

With the S&P 500 rising above the psychological 6000 mark, the upper long-term uptrend channel line at around 6300 represents a potential upside target if recent bullish sentiment persists.

Only a bearish reversal and fall through the April and August lows at 5119-4954 would negate the medium-term uptrend, although such a drop currently seems unlikely.

S&P 500 weekly chart

Gold technical analysis

The spot gold price, despite consolidating below its October $2790 per troy ounce peak over the past six weeks, remains in a long-term uptrend. A rise above the October high would target the psychological 3000 mark.

Only a fall through the November trough at $2537 could lead to the major $2450-$2353 support zone being revisited. This zone includes the April to May highs and late July low and would likely hold if retested. Only a significant deterioration in employment conditions might prompt more aggressive Fed action, but current trends suggest a measured approach to monetary policy.

Spot gold weekly chart