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NFP is coming. Are you ready?
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The U.S. Nonfarm Payrolls and Unemployment Rate are out tomorrow,
December 7, 2018, at 12:30 UK Time (GMT)
and 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.
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What to expect this month:
NonFarm Payrolls| 200K Consensus; 250K Previous
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We expect that in November, the volume of employment in the US non-farm sector will again show strong data - about 200 thousand new jobs. The US stock market even slowly but comes to life and the fundamental data on the growth of various spheres of the American economy indicate a very strong and, most importantly, stable development.
Special programs of the administration of the current US President Donald Trump in the automotive, steel, food industry, coupled with the growth of the services sector add optimism to investors. The recent agreement on a truce in the trade war with China also can not but rejoice representatives of companies from various sectors of the national economy.
If this forecast is justified, then we can expect a rally of the US currency.
Average hourly earnings level, according to our forecast, will slightly increase - up to 0.3% on a monthly basis. This factor not only confirms the existing trend, but is also a kind of compensatory and corrective after hurricanes swept over the USA in the autumn. We believe that a consistently good value of this indicator will continue in the future.If the forecast is justified, then it will contribute to the growth of the US dollar, and together with strong NFP numbers can lead to a short-term rally.
Unemployment Rate
| 3.7% Consensus; 3.7% Previous |
The unemployment rate indicator is likely to remain unchanged compared to the previous month. Together with other indicators, the unemployment rate also shows a steady positive trend, despite its slight fluctuations in some months - from 3.6 to 3.7%.
Reports from national corporations still suggest that the US market needs an additional influx of labor. This undoubtedly benefits this indicator.
If this forecast is justified, then traders should expect a positive movement of the US currency. In the case of excellent data on other indicators, it is worth waiting for the rally of the American currency.
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To keep your open positions and survive during the time
of market volatility due to news release, make sure you have enough funds in your account.
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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, means 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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| Risk Warning:Forex and CFD trading carry a high degree of risk. As such they may not be suitable for all investors. Investors should ensure they fully understand the risks associated with CFD trading before deciding to trade. Investors may choose to seek independent advice and should not risk more than they are prepared to lose. |
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