NFP comes. Are you ready?
The U.S. Nonfarm Payrolls and Unemployment Rate are out this coming Friday, December 8, 2017, at 13:30 UK Time (GMT), 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.
What to expect this month:
Nonfarm Payrolls:
184K Consensus;
261K Previous
U.S. Unemployment Rate:
4.2% Consensus;
4.1% Previous
According to the forecasts, the growth of non-agricultural workplaces in America in November slowed down in comparison with the October level, and in November about 184,000 new jobs were created, which is almost 30% less than in October. This can negatively affect the American currency.
There also will be released another important indicator - Unemployment Rate statistics. The market expects that the previous October record of employment will be offset, and unemployment will grow to 4.2% of the working population.
In addition, there will be statistics on the dynamics of the average hourly wage in the United States for November (in October, average wage rates rose by 2.4%). If the labor market statistics coincide with unfavorable market expectations, this could weaken the USD against its main competitors in the currency market.
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.
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