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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,
February 1, 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
| 165K Consensus; 312K Previous
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The average market outlook for employment is 165 thousand after 312 thousand in the last month, although we tend to believe that the numbers may be around 150 thousand. This is not bad for the American economy, since it means the fact that employers continue to actively fight for good personnel, which, in turn, can spur salary growth sufficiently.
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 decrease - to 0.3% on a monthly basis. The last release brought a surprise in the form of growth up to 0.4%. The current forecast does not mean a trend reversal, especially considering the recent good reports of American companies.
If the forecast is justified, 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
| 3.9% Consensus; 3.9% Previous |
The unemployment rate is likely to remain at the same level, compared with the previous month, when the indicator figures for a short time alarmed investors. However, experts tend to consider a slight increase in the numbers of the indicator as a temporary phenomenon.
If this forecast is justified, then traders can expect the growth of the US currency. In case of excellent data on other indicators, it is worth waiting for a short-term rally of the US currency.
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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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