The Job Openings and Labor Turnover Survey (JOLTS) will be released on Tuesday by the U.S. Bureau of Labor Statistics. Due to the prolonged government shutdown, this publication will provide data on changes in the number of job openings in September and October, as well as the number of layoffs and resignations.

Ahead of the announcement, market participants expected job openings to reach 7.2 million in October. The last report released showed 7.227 million job openings in August. This report will be released 24 hours before the Federal Reserve's December monetary policy announcement and will likely have a limited impact on policymakers' decisions this time. However, more U.S. employment data will be released in the coming days, and it will likely fuel speculation about what the Fed may or may not do throughout 2026.

JOLTS data is closely scrutinized by market participants and Fed officials because it can provide valuable insights into the dynamics of labor market supply and demand, a key factor influencing wages and inflation.

The labor market has cooled, perhaps a little too much. Fed policymakers now seem more focused on the employment situation than on inflation, which, however, remains above the central bank's target of around 2%.

What to expect in the next JOLTS report?

While the JOLTS Job Openings report provides clues about labor demand, there's one caveat: it's a lagging indicator, as it's typically released one month later. In this case, due to the US government shutdown, the report is already two months old, as it covers data for September and October. As mentioned earlier, this won't have a direct impact on the Fed's decision, but along with other employment data, it will likely shape speculation about what the Fed will do in 2026.

Meanwhile, speculative interest continues to rise amid speculation about a 25 basis point (bps) interest rate cut. However, beyond the interest rate decision, the central bank will also release its Summary of Economic Projections (SEP), a document outlining policymakers' expectations for economic developments and the direction of monetary policy. The language of the monetary policy statement and the SEP can have a significant impact on financial markets.

Currently, a weak labor market is the primary reason for interest rate cuts. If employment data shows encouraging results, investors may reduce speculation about future interest rate movements. The US dollar will likely strengthen due to solid local data, coupled with a reduced likelihood of a rate cut. The opposite scenario also applies: poor data fuels speculation of a rate cut, which in turn weakens the USD. (alg)

Source: FXstreet