The U.S. Nonfarm Payrolls and Unemployment Rate are out this coming Friday, September 1, 2017, at 13:30 UK Time (GMT+1), and are expected to cause significant volatility in the markets.An economic indicator that tends to trigger sharp market movements in the minutes leading up to its release and afterwards, the NFP is released by the U.S. Department of Labor on the first Friday of each month, outlining changes in the number of employees, excluding farm workers and those employed by the government, non-profit organisations and private households.
This
month:
Nonfarm Payrolls:
180K Consensus;
209K Previous
Nonfarm U.S. Unemployment Rate:
4.3% Consensus;
4.3% Previous
NFP index:
The recent positive trend in NFP releases continued in July with 209,000 new positions added which helped reduce the unemployment rate to 4.3%. NFP for August, per market consensus, is expected to come in at 180,000, underscoring a strong US Labour Market. The markets will also be closely watching the Average Hourly Earnings release with many hoping to see an improvement on the previous two readings of 2.5%. Average earnings need to increase for consumer spending to rise that will then help increase inflationary pressure. Analysis indicates that the market-implied probability that the Fed raises rates by year-end is around 30%. Fed funds futures are not fully pricing in another 0.25% rate hike until September 2018.
Keep in mind:
 | During the NFP announcement, expect high volatility, especially across USD pairs. |
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| Market sentiment can really affect currency movements. What traders expect from the report has as much impact as the actual released data, if not greater. |
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| A higher figure than the one registered during the previous month signifies an improvement in employment numbers. This, as well as the release of a higher-than-expected figure, mean an increase in the number of jobs created and are positive for both the U.S. economy and the dollar. |
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| A lower figure than the one registered during the previous month, as well as a lower-than-expected figure, usually have a negative impact on the dollar as they demonstrate a drop in employment numbers. |
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| Remember that the sudden spike observed across the charts of many currency pairs upon the release of the NFPs is usually followed by a period during which the market tries to recover and return to its initial price levels. |
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