US Jobs Report Likely to Confirm Fed Policy

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If market expectations are met for Friday’s Non-Farm Payrolls figure to come in at around 200,000 new jobs created then there is unlikely to be much movement in USD exchange rates or any change in the US Federal Reserve’s monetary policy.

In effect it could be quite a dull event. Other than the usual momentary spike in volatility on the numbers release, a jobs figure close to 200,000 for April will probably do little to alter perceptions or the direction of the USD. Also, the US Federal Reserve is likely to carry on reducing its bond purchase programme by $10 billion a month.

Therefore movement in the USD, in the short term at least, is likely to be driven by events elsewhere. On EUR/USD the focus is very much on the European Central Bank as it frets over potential deflation and the strength of the single currency.  As seen recently the GBP/USD cross is very sensitive to the growth prospects of the UK economy.

By Justin Pugsley, Markets Analyst MahiFX. Follow @MahiFX on twitter

EUR/USD poised for NFP

EURUSD prediction May 2 2014 technical forex chart for currency trading

But then again…it might not be so dull

If there is any surprise on NFP it is likely to be on the upside in line with the general recovery in jobs numbers since they hit a low point in December. Also, the effect of the winter weather has passed and this may have seen some delayed economic activity take place on top of the general recovery in growth.

Another encouraging factor is that there is evidence of credit growth in US economy suggesting that companies and consumers are spending more. At the high end of forecasts puts NFP at 250,000. A figure in that range or larger will certainly trigger the forex markets to bring forward expectations of an interest rate hike once the Fed’s tapering is over. That would be supportive for the USD.

However, the usual caveat is that NFP is generally a difficult number to predict and for whatever reason it could still surprise on the downside even though the evidence suggests otherwise and markets are generally poised for a stronger number.

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About Author

MahiFX is headed by David Cooney, former global co-head of currency options and e-FX trading at Barclays Capital and responsible for the award winning e-commerce platform BARX and Susan Cooney, former head of e-FX Institutional Sales in Europe for Barclays Capital. Operating as a market maker, MahiFX provides traders direct access to institutional level execution speeds and spreads through its proprietary-built fully automated pricing and risk management technology, lowering the cost of retail forex trading. MahiFX global operations are headquartered in Christchurch, New Zealand with offices in London, UK with development and support teams in both locations for 24 hour service. The company is regulated by The Australian Securities and Investments Commission (ASIC), Australia’s corporate, markets and financial services regulator. Article by Justin Pugsley, Markets Analyst MahiFX  Follow MahiFX on twitter and on facebook  Disclaimer: This material is considered a public relations communication for general information purposes and does not contain, and should not be construed as containing, investment advice or an investment recommendation, or an offer of or solicitation for any transactions in financial instruments. MahiFX makes no representation and assumes no liability as to the accuracy or completeness of the information provided. The use of MahiFX’s services must be based on your own research and advice, and no reliance should be placed on any information provided or comment made by any director, officer or employee of MahiFX. Any opinions expressed may be personal to the author, and may not reflect the opinions of MahiFX, and are subject to change without notice

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