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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,
June 7, 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
Last data: 263K Consensus forecast: 196K
The US employment market continues to be one of the strongest arguments of the administration of the current US President Donald Trump. Past numbers of 263K of new jobs, together with a 3.6% unemployment rate, have silenced even the most ardent opponents of his policies. This Friday, analysts are cautiously awaiting an indicator correction to 196K, although no one will be surprised if the release exceeds the wildest market expectations.
All preliminary indicators point to another strong release. The index of business activity in the US manufacturing sector, published by the Institute for Management Supply (ISM), showed a sub-component of employment of 53.7% in May, an increase of 1.3% compared with the April index. Although the PMI fell slightly from 52.8 to 52.1, the labor market in the manufacturing industry looked good steadily last month, which adds momentum to positive trends in the employment sector.
If this forecast is justified, then Forex market traders should expect an increase in the US dollar relative to all major competitors. In case of a significant excess of the predicted figures, strong volatility in the market is possible.
Average Hourly Earnings
Last data: 0.2% Consensus forecast: 0.3%
We believe that on a monthly basis, the average hourly earnings will rise - to a level of 0.3%. The earnings component has become the main part of the workplace report, since workers who earn more usually spend more, and this stimulates the economy. Given the general level of inflation in the United States at 2%, workers are currently feeling a real wage increase.
If this forecast is justified, then, together with good numbers on the number of new jobs, this will contribute to an even greater increase in the US dollar.
Unemployment Rate
Last data: 3.6% Consensus forecast: 3.6%
The unemployment rate in the United States remains at historic lows, and we believe that this trend will continue, taking into account all the other major fundamental indicators of the national economy. This time, most likely, the release will remain at the previous figures of 3.6%.
If this forecast is justified, then in combination with good numbers on NFP and wages, this can lead to a 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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