The number of job openings on the last business day of June stood at 9.58 million, the US Bureau of Labor Statistics (BLS) reported in the Job Openings and Labor Turnover Survey (JOLTS) on Tuesday. This reading followed 9.82 million openings in May and came in slightly below the market expectation of 9.62 million.
"Over the month, the number of hires and total separations decreased to 5.9 million and 5.6 million, respectively," the BLS further added in the press release. "Within separations, quits (3.8 million) decreased, while layoffs and discharges (1.5 million) changed little."
Market reaction
The US Dollar Index (DXY) retreated modestly from the multi-week high it set at 102.43 with the initial reaction to this data. As of writing, DXY was still up 0.35% on the day at 102.22.
Economic Indicator
United States 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.This section below was published at 09:00 GMT as a preview of the US JOLTS Job Openings data for June.
- JOLTS report will be watched closely by Fed officials ahead of July jobs data.
- Job openings are forecast to fall to 9.6 million in June.
- US labor market conditions remain out of balance despite Fed rate hikes.
The Job Openings and Labor Turnover Survey (JOLTS) will be released on Tuesday, August 1, by the US Bureau of Labor Statistics (BLS). The publication will reveal the change in the number of job openings in June, alongside the number of layoffs and quits.
JOLTS data will be scrutinized by market participants and Federal Reserve policymakers, as it could provide valuable insights regarding the supply-demand dynamics in the labor market.
What to expect in the next JOLTS report?
The number of job openings on the last business day of June is forecast to decline to 9.6 million from 9.8 million in May. "Over the month, the number of hires and total separations were little changed at 6.2 million and 5.9 million, respectively," the BLS noted in May’s JOLTS. "Within separations, quits (4.0 million) increased, while layoffs and discharges (1.6 million) changed little."
The Federal Reserve (Fed) has been paying close attention to the job openings data to assess whether the supply-demand remain out of balance. In June, the BLS reported that there were more than 5.9 million unemployed. Following the July policy meeting, Fed Chairman Jerome Powell said that they were observing sings of labor supply and demand coming into better balance. Powell, however, noted that that labor demand was still substantially exceeding supply. In case jobs openings decline to 9.6 million in June as expected, that would translate into 1.6 jobs for each unemployed.
Fed officials are concerned that the slow recovery in the supply side of the labor market could lead to higher wages and make it difficult for them to bring inflation back to target.
FXStreet Analyst Eren Sengezer shares his view on the importance of the JOLTS Job Openings data and the potential market reaction:
“Market participants are uncertain whether the Fed will raise the policy rate again before the end of the year. Although Powell’s cautious tone regarding future policy tightening revived expectations for a no-change in the Fed policy rate in 2023, upbeat macroeconomic data releases, including the second-quarter Gross Domestic Product (GDP) growth, caused investors to scale back dovish Fed bets.”
“If there is a noticeable decline in the number of job openings, with a reading below 9 million, the US Dollar (USD) could come under renewed selling pressure. On the flip side, an increase toward 10 million would reaffirm tight labor market conditions and have the opposite impact on the currency’s performance against its major rivals.”
When will the JOLTS report be released and how could it affect EUR/USD?
Job openings data will be published on Tuesday, August 1, at 14:00 GMT. The report could influence the action in EUR/USD due to its potential influence on the market pricing of the Fed’s rate outlook. It’s also with noting that the Euro has been struggling to stay resilient against its rivals after European Central Bank (ECB) President Christine Lagarde refrained from confirming one more increase in key rates in September.
Eren points out key technical levels to watch for EUR/USD ahead of JOLTS data:
"EUR/USD dropped below 1.1000 early Tuesday and the Relative Strength Index (RSI) indicator on the daily chart retreated below 50, reflecting a bearish bias. On the downside, 1.0900 (100-day SMA) aligns as important support ahead of 1.0800 (Fibonacci 61.8% retracement of the March-July uptrend) and 1.0740 (200-day SMA)."
"In case EUR/USD reclaims 1.1000, 1.1070 (20-day SMA) could be seen as the next recovery target before 1.1100 (psychological level) and 1.1150 (static level)."
US Dollar FAQs
What is the US Dollar?
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022.
Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
How do the decisions of the Federal Reserve impact the US Dollar?
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates.
When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
What is Quantitative Easing and how does it influence the US Dollar?
In extreme situations, the Federal Reserve can also print more Dollars and enact 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 when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
What is Quantitative Tightening and how does it influence the US Dollar?
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
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