Currency analyst

NFP report is coming on Friday

Tomorrow will be a red-letter day in the trader’s calendar. Everybody with bated breath will be waiting for the Non-Farm Payrolls report coming from the US. The NFP is a key economic indicator designed to represent the overall number of paid workers in the US not including farm employees, government employees, and the people working for nonprofit organizations. So, let’s figure it out, why this indicator is so important for traders.

 It is because this indicator has always been a major troublemaker in the markets and spoiler of the trading desks. Many stakeholders prefer to close their positions before the “Black Friday” knocks at their door (the indicator occurs on the first Friday of every month) and wait for the market to digest the report followed by extreme swings in quotes’ movement.

September employment data coming this week is expected to be better than those we got in August. The indicator should rise to 171K from previous 151K. Barclays NFP forecasts even better data – a 200K rise, which includes 185K from the private sector. If this expectation is justified, it will add weight to the case for a rate hike sooner or later. We must admit that the later forecast is a bit ambitious given the fact that Automatic Data Processing has recently provided us with poor information about the non-farm employment change yesterday (154K versus 166K expected). But don’t be too upset; the ADP’s data don’t often match the Friday’s NFP report.

You might ask why this NFP report influences the currency so much. In a nutshell, if the NFP data are really good, the Fed will have more incentives to rise its interest rates. The Fed’s officials are keeping a close eye on it, as they are committed to ensure full employment in the US economy. The more jobs are created the higher level of consumption we get. And this, in turn, leads to the increase in GDP.

Knowing that you will be overwhelmed with the NFP report, we’ve decided to remind you about other important releases coming this Friday – trade balance, unemployment rate and average hourly earnings. So, it going to be a really busy day. Meanwhile, we suggest you to take a good nap today and muster up your strength for tomorrow.


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