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What to expect from NFP release?
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The U.S. Nonfarm Payrolls and Unemployment Rate are out tomorrow,
January 4, 2019, at 13:00 UK Time (GMT)
and expected to cause significant volatility in the markets.
On the first Friday of the first month of the new year, the attention of traders will be directed to a fresh package of US fundamental data on the labor market.
An economic indicator that tends to trigger sharp market movements
in the minutes leading up to its release and afterwards, the NFP is released by the U.S. Department of Labor on the first Friday of each month, outlining changes in the number of employees, excluding farm workers and those employed by the government, non-profit organisations and private households.
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What to expect this month:
NonFarm Payrolls| 177K Consensus; 155K Previous
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We expect that the data for December, in the context of general pessimism in the market, in terms of employment in the non-agricultural sector of the United States will show about 177 thousand new jobs. Despite the fact that the stock market is more or less recovering, the level of employment will most likely not be able to reach the desired 200 thousand. The statistics of growth in some spheres of the American economy also added the negative. Its influence, albeit indirect, also had a government crisis. If this forecast is justified, then we can expect a moderate growth of the US currency. Average Hourly Earnings, according to our forecast, will slightly increase - up to 0.3% on a monthly basis. At the moment it is difficult to determine whether these figures will serve as an argument in favor of the existing positive trend, or whether they are temporary and having a kind of pre-New Year character. If the forecast is justified, then it will contribute to the growth of the US dollar, and together with strong NFP numbers can lead to a short-term rally.
Unemployment Rate
| 3.7% Consensus; 3.7% Previous |
The unemployment rate indicator is likely to remain unchanged compared to the previous month. Despite weak statistics from various areas of the US economy, this indicator continues to show very stable and good numbers. If this forecast is justified, then traders can expect the growth of the US currency. In the case of excellent data on other indicators, it is worth waiting for a short-term rally of the US currency. |
To keep your open positions and survive during the time
of market volatility due to news release, make sure you have enough funds in your account.
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Keep in mind: - During the NFP announcement, expect high volatility, especially across USD pairs.
- Market sentiment can really affect currency movements. What traders expect from the report has as much impact
as the actual released data, if not greater.
- A higher figure than the one registered during the previous month signifies an improvement in employment numbers. This, as well as the release of a higher-than-expected figure, means an increase in the number of jobs created and are positive for both the U.S. economy and the dollar.
- A lower figure than the one registered during the previous month, as well as a lower-than-expected figure, usually have a negative impact on the dollar as they demonstrate a drop
in employment numbers.
- Remember that the sudden spike observed across the charts of many currency pairs upon the release of the NFPs
is usually followed by a period during which the market tries
to recover and return to its initial price levels.
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| Risk Warning:Forex and CFD trading carry a high degree of risk. As such they may not be suitable for all investors. Investors should ensure they fully understand the risks associated with CFD trading before deciding to trade. Investors may choose to seek independent advice and should not risk more than they are prepared to lose. |
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