Non-Farm Payrolls must show gains in jobs this time – the high expectations became higher with the release of the ADP figure that was better than expected. Will there be dollar rally on Friday? Here’s a preview for the Non-Farm Payrolls for January.
Last month’s Non-Farm Payrolls were disappointing and showed a loss of 85,000 jobs in the US in December. There was one point of light – November’s number was revised to the upside and was positive – 4,000 jobs were gained in November. This is what stopped the dollar from dropping sharply.
ADP Non-Farm Employment Change, which measures the jobs in the private sector, showed a loss of 22,000 jobs. While this is still a negative number, it was better than early expectations for 31K lost jobs. In addition, last month’s number, 84K lost jobs was revised to the upside – 61K lost jobs.
This preliminary figure comes two days before the Non-Farm Payrolls and is sometimes considered as the “mini-NFP” or an indicator. I don’t take this as an indicator, but it sure is a market mover – the dollar made gains immediately after the release. EUR/USD, that already flirted with the 1.40 line, fell back down. GBP/USD fell below 1.60.
Apart from moving the markets in the short term, the ADP NFP creates expectations for Friday. Current market expectations are for a gain of 13,00 jobs in January. Some analysts are expecting a loss of jobs while others are expecting a higher gain.
A positive number will boost the dollar on Friday. It will raise the chances of a rate hike, or at least the removal of the pledge to keep the interest rates low for “an extended period of time”. A positive number is necessary to erase the doubts about the Q4 GDP, which was strong but was jobless. A jobless recovery isn’t enough for Americans, and isn’t enough for the dollar.
If Non-Farm Payrolls show a loss of jobs, this will be disastrous for the dollar, as the expectations are very high now.
I’ll be following the Non-Farm Payrolls release and the impact on the forex market with Currensee and SpotEuro Trader Alex Kazmarck (10 years of experience) for a special live trading room webinar featuring analysis and commentary before and after the release of this very important economic indicator.
I’ve watched this webinar last month and it was fascinating. The focus is on the EUR/USD pair. You get to learn about trading news events, live technical analysis and derivation of support and resistance levels before the release of the number. The webinar begins half an hour before the release, at 13:00 GMT and is free to attend. The number of seats is limited, so if you’re interested (I enjoyed it!), then I recommend registering to it here.
Further reading: 5 Notes about Non-Farm Payrolls Trading.