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.
What to expect this month:
Nonfarm Payrolls: 88K Consensus; 156K Previous
U.S. Unemployment Rate: 4.4% Consensus; 4.4% Previous
The NFP for September, per market consensus, is expected to come in at a meagre 88,000 due to the impact of the recent hurricanes. However, with the knowledge that the NFP will reflect the negative effects of Harvey and Irma, the markets will have most likely “priced-in” a poor data release.
What to expect this month:
Nonfarm Payrolls: 88K Consensus; 156K Previous
U.S. Unemployment Rate: 4.4% Consensus; 4.4% Previous
The NFP for September, per market consensus, is expected to come in at a meagre 88,000 due to the impact of the recent hurricanes. However, with the knowledge that the NFP will reflect the negative effects of Harvey and Irma, the markets will have most likely “priced-in” a poor data release.
The markets will be closely watching the Average Hourly Earnings release as well, with many hoping to see an improvement on the previous readings.
The previous release of 0.1% was the lowest increase since March, and the consensus is calling for a robust increase in September’s release to 0.3%. With higher average earnings, Consumer Spending should increase, which would most likely help create inflationary pressure – helping underscore the Federal Reserve’s plans to hike rates before the end of the year.
If we see a significantly bad NFP release of 4.4%, it is expected that the markets will see USD come under downward pressure. A strong NFP release of >150K, with the Unemployment Rate below 4.3%, will likely result in USD strengthening.
As always, it will be important to note any revision from the previous month (156K), as this will affect market sentiment regardless of the current release.
Keep in mind:
During the NFP announcement, expect high volatility, especially across USD pairs.
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.
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.
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.
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.
If we see a significantly bad NFP release of 4.4%, it is expected that the markets will see USD come under downward pressure. A strong NFP release of >150K, with the Unemployment Rate below 4.3%, will likely result in USD strengthening.
As always, it will be important to note any revision from the previous month (156K), as this will affect market sentiment regardless of the current release.
Keep in mind:
During the NFP announcement, expect high volatility, especially across USD pairs. 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. 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. 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. 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.Get Bonus No Deposite in your Trading Account now and add this currency pair to your forex portfolio, enjoy your trading with us!
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