• US JOLTS data will be closely watched by investors ahead of the release of the October jobs report on Friday.
• The number of job offers is expected to fall just below 8 million in September.
• The state of the labor market is a key factor for Fed officials when setting policy.

The U.S. Bureau of Labor Statistics (BLS) will release its Job Opportunities and Employee Turnover Survey (JOLTS) on Tuesday. The publication will provide data on the change in the number of job offers in September, as well as the number of layoffs and departures.

JOLTS data is analyzed by market participants and Federal Reserve (Fed) policymakers because it can provide valuable information about labor market supply and demand dynamics, a key driver of wages and inflation. The number of job offers has been steadily decreasing, starting from over 12 million in March 2022, indicating a continuing deterioration in labor market conditions. However, the downward trend was stopped in August when the number of job offers rose above 8 million from 7.7 million in August.

What can we expect from the next JOLTS report?

Markets expect the number of job offers to reach 7.99 million on the last business day of September. After the July policy meeting, Federal Reserve (Fed) policymakers made clear their focus was on the labor market, given encouraging signs that inflation was returning to the central bank’s target.

It is crucial to note that while the JOLTS data is for the end of September, the official jobs report includes data for October.

The upbeat September jobs report, which showed nonfarm payrolls (NFP) increasing by 254,000, led market participants to refrain from pricing in another massive Fed rate cut at the November 7 policy meeting. In assessing the latest employment data, Kansas City Fed President Jeffrey Schmid argued that the labor market was normalizing rather than outright after a period of record overemployment and unbearably low unemployment rates.

The CME FedWatch Tool now shows that markets are almost fully pricing in a 25 basis point (bps) rate cut at the next policy meeting. Meanwhile, the probability of another 25 basis point rate cut in December is now around 72%, with a 27% chance of policy being maintained.

In the event of a positive surprise in job openings data, with a reading of 8.5 million or above, the immediate reaction could strengthen the US dollar (USD), forcing investors to reassess the likelihood of a December interest rate cut. On the other hand, a disappointing result of 7.5 million or below could hurt the USD.

“Employment changed little during the month and amounted to 5.3 million. Total departures changed little at 5.0 million,” the BLS noted in its August JOLTS report. “In the case of separations, departures (3.1 million) continued to trend downward, and layoffs and layoffs (1.6 million) remained little changed.”

When will the JOLTS report be published and what impact may it have on EUR/USD?

Job numbers will be published on Tuesday at 14:00 GMT. Eren Sengezer, Chief Analyst for the European Session at FXStreet, shares his view on the potential impact of JOLTS data on EUR/USD:

“Unless there is a significant divergence between market expectations and the actual print, the market reaction to the JOLTS data is likely to be short-lived, with investors refraining from taking large positions ahead of the third quarter gross domestic product (GDP) data and the October jobs report, which will be published on Thursday and Friday respectively.”

“The short-term technical outlook for EUR/USD suggests that the bearish bias remains intact. The index’s relative strength index (RSI) remains below 40 on the daily chart, and the 20-day elementary moving average (SMA) continues to move away from the 100-day SMA after a bearish crossover slow last week.

“On the other hand, the 1.0870 level (23.6% Fibonacci retracement level of the October downtrend, 200-day SMA) marks key resistance. If EUR/USD rises above this level and starts using it as support, technical buyers will be able to take action. In this scenario, the 1.0930 level (38.2% Fibonacci retracement, 100-day SMA) can be seen as the next bullish target before 1.1000 (round level). Looking south, first support can be seen at 1.0770 (end of the downtrend), ahead of 1.0700 (round level) and 1.0620 (April static level).”