As the three benchmark U.S. stock indexes all notched record closing highs Thursday, Boris Schlossberg, managing director of foreign exchange strategy at BK Asset Management, breaks down three key themes investors should watch for on the final trading day of the week.
1. Jobs report
The Bureau of Labor Statistics is set to publish its monthly employment report, which includes nonfarm payroll data and the unemployment rate, before the opening bell Friday. Schlossberg is keeping a close eye on this report as it's going to give investors further clarity as to whether the Federal Reserve may raise its federal funds target rate in September after likely hiking later this month.
"The critical thing about the jobs report is whether the U.S. economy is really picking up steam in the second half as everybody expects it to, or whether it's starting to slow down," he said Thursday on CNBC's "Trading Nation."
He will also be watching hourly wage growth, which has risen steadily but slowly over the last few years.
"It is popular to say 'there is no wage growth.' It is a good story, but it is simply not true. If you take the average of the year-over-year change in the employment cost index, average hourly earnings, median weekly earnings and compensation per hour you can see that wages started going up in 2014. What is correct to say is that 'rates markets have decided to ignore the uptrend in wages,'" Torsten Slok, Deutsche Bank's chief international economist, wrote in a note to clients Thursday morning.
Economists surveyed by Reuters expect that nonfarm payrolls added 184,000 jobs last month. The unemployment rate is projected to hold steady at 4.4 percent, unchanged from last month's report. The previous report reflected the economy added 211,000 jobs, a figure that far surpassed expectations.
2. Oil movement
Crude rallied early in the session Thursday on bullish inventory data before falling later in the day. Schlossberg is watching technical levels in oil carefully.
WTI crude dipped below $48 per barrel late Thursday, the level Schlossberg said that, if broken to the downside, would give way "to the $45 level. And that's a bad sign for the global economy."
The price of oil has slid more than 10 percent year to date even as OPEC has reiterated its focus on cutting global production.
3. U.K. election
The U.K. general election between British Prime Minister Theresa May and Labour Party candidate Jeremy Corbyn is set to take place next week. The latest polls show May losing some ground against her opponent. Schlossberg is watching closely as the election could prove to be a larger deal for American investors than they presently think.
"Although it hasn't gotten that much attention here, U.K. elections could be a very big surprise for the market. Prime Minister May called snap elections on the assumptions that she's going to win a massive majority – but it's turning out to be a very tough race," Schlossberg said Thursday.
"If indeed she doesn't win a big majority in the U.K. Parliament that could threaten U.K. assets," like the British pound, he added.
The pound has been flat against the dollar since late April.