Currency Analyst since 2010

NFP: get ready for trading

This week ends with a release which traditionally brings a lot of volatility to the market – US Non-Farm Payrolls (forecast: 196K, previous: 203K).

American unemployment rate is expected to stay at 5 year-low of 7.0% (there’s some risk of a higher number should the participation rate rise from its unusually low levels).

Although the Fed’s position is now clearer, market players aren’t sure whether to be pleased that US economy is recovering, or worried it might bring forward the day when the central bank starts hiking rates.

BK Asset Management points out that from the macroeconomic point of view there are move arguments in favor of stronger than weaker payrolls.

Credit Agricole believes that although an extremely positive ADP report (238K vs. 199K expected) has stolen some of the thunder from payrolls, NFP will still be a market mover. The specialists point out, however, that given the dollar’s recent rally and the recent strength in US data surprises, USD is likely to weaken more on a weak number than rally on a positive number.

Conclusion: If there’s positive surprise, the reaction in EUR/USD may be close to that in December (see the chart below). A lower NFP reading might provoke a decline in USD.  


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