What’s Next For Commodity Prices As Attention Turns To U.S Jobs Data?

Markets on Edge as U.S Jobs Report Looms

The Federal Reserve is at it again. Like the boy who cried wolf, the Fed’s flip-flopping on interest rates is dominating the markets and presenting traders with a magnitude of back-to-back money-making opportunities, almost on a daily basis!

With a recent string of surprisingly hotter-than-expected economic readings coming after two successive downshifts in interest-rate increases – an interesting debate is raging as to what the Federal Reserve should do next: Go back to super-sized rate hikes or stick with the smaller, quarter-point increases, but keep rates higher for longer.

The answer to that question may come from the hotly awaited U.S Non-Farm Payrolls report for February, due for release on Friday.

Last month, January’s Non-Farm Payrolls data delivered a heck of a surprise when it showed the U.S economy had added more than half a million jobs, while the unemployment rate dipped to 3.4% – a level not seen in more than five decades.

If we get a second strong jobs report on Friday, then it’s no longer an anomaly – and that’s a big problem for the Fed.

Economists expect hiring remained strong in February and that wages grew even faster than they did in January.

If the report is as expected, it will do little to quell concerns about a re-acceleration in inflation and almost certainly guarantee the chances of a bigger 50 basis-point rate hike at the Federal Reserve’s next policy meeting in less than two weeks.

A strong job market in normal times is the kind of news that might be celebrated, but in 2023 its cause for concern, as it suggests the economy is overheating.

Friday’s U.S jobs report will either make the Fed’s decision on the size of their next rate hike much easier or much more difficult. However, unfortunately for policy makers – a better-than-expected reading – will also come with the pain of higher for longer inflation.

Regardless of the outcome, these markets remain a trader’s paradise packed with endless opportunities to capitalize on the short-term macro-driven price action – And that’s the most optimal strategy right now!

Commodity Price Forecast for March 10, 2023

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