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Yet again, expectations are high from the upcoming Non-farm payrolls release. Great expectations can turn into great disappointments, but this seems like a win-win situation for the greenback. Here’s what to look for from this release of the “king of forex”.

According to economists’ estimations, American Non-Farm Payrolls are predicted to show another month of strong gains – 200K. If this is realized, it will be the second month in a row of gains reported in the initial release.

Until last month, we’ve only seen gains in revisions – initial releases, for the month that just ended, were negative. Last month’s gain, 162K, fell below expectations of a 185K gain, but the fact that a job gain was seen + low market volume at that time boosted the dollar. There were doubts about the figures – the government showed a gain of 123K in the private sector, while the figure release by ADP two days beforehand showed a loss of jobs.

This month’s release is expected to remove these doubts. Also now, the  decennial American census will contribute to gains in public jobs. But these gains are expected also in the private sector.    Large companies such as General Electric are hiring. This is also backed by purchasing managers’ indices that have risen in all sectors. On the other hand, note that weekly unemployment claims have been OK, but they didn’t shine. Jobless claims proved to be a good indicator for the NFP

The talk about a sustainable economic recovery will become stronger on such a score, and so will talks about a rate hike in the US. Higher employment will eventually turn into rising prices and a need to tackle inflation.

Forex market reaction

If you’re new to fores trading, note that this is very volatile and risky event. Please read my 5 notes for Non-Farm Payrolls trading.

Regarding EUR/USD, this is a win win situation for the dollar – the deepening debt issues in the old continent, as seen recently in Spain, weaken the Euro. A bad Non-Farm Payrolls score won’t really help the pair. Also the Pound is vulnerable to the Euro-zone’s debt issues, and will probably follow the Euro’s lead. But this depends on the election results as well.

The Aussie, that enjoyed yet another rate hike, and the Canadian dollar, that will get its own job figures 90 minutes before the NFP, can rise if payrolls are weak. But any result above 200K will make these currencies bow as well.

The American unemployment rate will probably remain unchanged at 9.7%. A drop up to 9.5% or a rise to 9.9% won’t make a difference – the focus will still be on the NFP. A fresh rise to 10% or higher will be alarming, but that is unlikely. A drop under 9.5% isn’t likely either.

Following the event

I highly recommend following this event, definitely the most important release for forex traders with this live trading webinar with Alex Kazmarck of SpotEuro. His sessions were fascinating in the previous releases.

It’s free for Currensee members. Currensee is a free social network for forex traders in which you can see other people’s trades. If you’re still not there, you’re welcome to sign up.

If you’re not on Currensee, the webinar costs $10, but it’s free if you use this link.

For those of you trading this event, good luck!

Disclosure: I’m affiliated with Currensee.

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