Markets hoping for job gains

This week will bring employment data, and hopefully, it’ll be good news.

We are currently in the midst of a quiet period following all of the recent central bank announcements and before the beginning of reporting season for Q3 earnings which will kick off the second week of October. However, some material economic data will be released this week that could certainly affect market sentiment.

The ISM Manufacturing and Non-Manufacturing indices are both expected to reach or exceed the 50.0 level for the first time since May.

Read: Self-employment booming in Canada

Data at this level would at least confirm that progress, albeit slow, continues to be made in the U.S. economic recover. The most influential data point of the week, though, will come on Friday when the U.S. Department of Labor provides employment statistics for September.

Economists are looking for job gains of 115,000 compared to 96,000 last month and for the unemployment rate to rise to 8.2% from 8.1% in August. While these numbers could be better, at least the job gains are moving in the right direction. The data will also be released just after the first U.S. Presidential debate between President Obama and Mitt Romney that will take place on Wednesday, October 3.

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In Canada, economists are looking for 10,000 overall job gains and for our unemployment rate to hold steady at 7.3%. With respect to corporate earnings, it will be a very quiet week on both sides of the border. Agriculture/fertilizer earnings will take center stage in the U.S. as we’ll see earnings out of both Mosaic and Monsanto.

We don’t see any fundamental news having a great impact on commodity markets this week, but the economic data could have an impact on the U.S. dollar, thus affecting commodity prices when incorporating the impact of foreign exchange.

Read: Faceoff: Foreign exchange

Disappointing ISM and employment data could lead to U.S. dollar weakness and a short term pop for both metal and energy commodities. This could also help the Canadian dollar if the Canadian employment report is strong.

Gareth Watson is the Vice President, Investment Management & Research at Richardson GMP in Toronto. This team of research experts is responsible for monitoring and interpreting economic, geo-political situations, current market environments and trends. @Gareth_RGMP