Jobs, jobs and jobs

Dolan lists the top report in the current environment as — not surprisingly the non-farm payroll numbers (released as part of the monthly employment report, and almost always the most closely watched U.S. economic indicator), followed by retail sales, personal income expenditures and durable goods.

“My thinking is the employment report is more significant now in terms of assessing the economy,” he says. “[Employment] is the prevailing model of growth; it’s supposed to be strong in what we thought was a growing economy. You won’t have a sustainable economy without jobs.”

The U.S. Labor Department’s monthly payroll numbers — which reflect the actual payroll statistics of non-farm jobs — is important to the U.S. dollar because a vigorous jobs report could drive interest rates higher, which can make the dollar more attractive to foreign investors. A weak report softens demand for U.S. currency because it puts downward pressure on rates, potentially making the dollar less appealing to foreign investors.

“The employment report plays a critical role in the actions of the dollar,” says Alex Beuzelin, foreign exchange market analyst at Ruesch International. “The markets view it as a good barometer of economic activity and it plays a role as to why the Fed raises and lowers rates.”