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What to know ahead of the July jobs report release

Yahoo Finance's Brian Cheung previews what to watch from the July jobs report.

Video transcript

- Let's turn our attention to what's going on with digital currencies, especially when Federal Reserve Governors and members of the Federal Reserve start talking. Brian Cheung is following the latest on that. Brian, what are we hearing from Governor Waller?

BRIAN CHEUNG: Well, some big questions about whether or not the Federal Reserve might issue a digital dollar, that might be held in something like a digital wallet that's run by the Federal Reserve. But not so fast, says a top Federal Reserve official. And as you mentioned, that is Fed governor Christopher Waller. He was speaking today and said honestly, even though proponents say it could be a cheaper way to facilitate digital payments, that he personally feels like it doesn't necessarily outweigh the risks of some of these private offerings already offering cheaper options.

And then there's also the cybersecurity concerns. Take a listen to what he told the American Enterprise Institute earlier this morning.

CHRISTOPHER WALLER: One of the things that definitely concerns me as a Federal Reserve Governor and doing a CBDC is just the cyber risk. I mean, we've been watching for the last couple of years the risk of attacks on systems. And that we want to open ourselves up to this kind of extreme cybersecurity risk. And a CBDC would be a very tempting target.

BRIAN CHEUNG: And you can hear his concerns right there. Very similar remarks as we heard from the Fed Vice Chairman of Supervision Randy Quarles in the end of June, who also said he worries that if the Fed were to create a digital currency, it might just have a massive target on its back from the likes of cyber-attackers.

All this heating up as the Federal Reserve prepares a September white paper which could kick off discussions about not only how the Federal Reserve should approach the regulation of cryptocurrencies, but how the Fed itself might have a role if it does decide to pursue some sort of digital currency. So definitely all of which is worth watching in the next months to come.

- Another thing that we're going to be watching tomorrow, Brian, is the jobs report. We get that out at 8:30 AM Eastern time. We got jobless claims this morning. I guess it was an OK report, with 385,000 people filing for jobless claims last week. Relatively speaking, I guess that's a pretty strong number, but still significantly higher than what we saw pre-pandemic. What are we expecting to see tomorrow? And I guess, what are investors hoping to see?

BRIAN CHEUNG: Yeah, well, you can see some of those estimates on the screen ahead of you. There are a number of different types of expectations for what that figure could come in. Now, keep in mind that this is a jobs report that will cover the month of July. So the consensus estimate, or rather the median estimate, is something close to 870,000 non-farm payroll adds in that month.

But you see some on the high end of that scale, like Oxford Economics, predicting maybe something closer to one million. But then you have the likes of Bank of America Securities projecting something like 750,000. So this could really go a number of ways. But of course, all of these numbers are pretty high. So it does seem like maybe, if there were to be some surprise, it could be something on the downside.

Now, this type of number could be very important, specifically for where Fed policy heads next. We were just talking about Christopher Waller, Fed governor. He said that if the July and August jobs reports come in something in the range of 800,000 to a million each, that would signal to him that the economy would be ready as soon as September to maybe take on announcement for a taper of its $120 billion a month pace of asset purchases, which means that tomorrow's jobs report could be very critical for Fed policy heads next.

- And we will be watching it, just as Brian Cheung watches the Fed for us. Thank you, Brian.