EUR/USD: Trading the US NFP Sep 2013


US Non-Farm Employment Change measures the change in the number of newly employed people in the US, excluding workers in the farming industry. A reading which is higher than the market forecast is bullish for the dollar.

Here are the details and 5 possible outcomes for EUR/USD.

Published on Friday at 12:30 GMT.

Indicator Background

Job creation is one of the most important leading indicators of overall economic activity. The release of US Non-Farm Employment Change is highly anticipated by the markets, and an unexpected reading could affect the direction of EUR/USD.

Non-Farm Employment Change dropped sharply from 195 thousand in July to just 162 thousand in August. This was well below the estimate of 184 thousand. The markets are expecting a substantial improvement in the upcoming release, with an estimate of 177 thousand. Will the indicator meet or beat this prediction?

Sentiment and Levels

As we begin the month of September, there are several reasons to worry about the euro: a third bailout for Greece seems inevitable, German data has been sputtering and Draghi can add to the weight on the euro.

As well, the dollar has support of its own, with increasing speculation that the Fed will begin tapering in September, perhaps by $15 billion. Currently a “Septaper” is a close call for the Fed and the markets. In the last days of summer, we could see some more volatility, but no clear choice of direction. So, the overall sentiment is bearish on EUR/USD towards this release.

Technical levels, from top to bottom: 1.3350, 1.33, 1.3240, 1.3175, 1.31 and 1.3050.

5 Scenarios

  1. Within expectations: 172K to 182K. In such a scenario, the EUR/USD is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: 183K to 190K: An unexpected higher reading could send the pair below one support line.
  3. Well above expectations: Above 190K: The chances of such a scenario are low. Such an outcome could bolster the dollar, and a second support line could fall as a result.
  4. Below expectations: 164K to 171K: A weaker reading than forecast could result in EUR/USD pushing above one line of resistance.
  5. Well below expectations: Below 164K. In this scenario, the pair could move above a second resistance line.

For more about the euro, see the EUR/USD forecast.

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About Author

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.