It’s the first Friday of the month. And that can only mean one thing – NFP day.
And as fears mount over a coronavirus pandemic and global economic slowdown, traders around the world sit tight in expectation that the global crisis has affected one of the key indicators of US economic health.
So, what happened last month?
The world’s largest economy kicked off the new decade in fashion by gaining 225K jobs, coming in stronger than the market’s predictions of 160K, and bringing wages to their longest string of gains since the financial crisis.
January’s upbeat better-than-expected figure triggered a notable +1.52 deviation.
What can we expect for February’s report?
The markets are expecting a drop in new jobs created, from 225K to 175K, with the unemployment rate holding steady at 3.6%.
According to analysts, hourly earnings are expected to rise 0.3% after January’s 0.2% gain, annual earnings should increase 3% following 3.1% in January, while average weekly hours are expected to hold steady at 34.3.
The report is expected to squash many concerns and replace them with facts. However, having said that, some of the hiring decisions will have been made before the coronavirus became a global concern.
The next reports that follow will likely display more accuracy on the situation.
Why is this month critical?
The USD has paid the price over the past two weeks as the stress surrounding the fight against coronavirus continues to weigh heavily on the value of the dollar.
And while the NFP report does tend to move all markets including currencies, equities, treasuries, interest rates and commodities, today’s results are expected to largely affect both the dollar and Fed rate cut bets.
If the released employment figures deviate from market estimates and prompt big moves in Fed rate cut bets, the USD could swing wildly.
However, some investors remain hopeful after the “precursor” to the NFP, the ADP Non-Farm Employment data, came in better-than-expected at 183K, beating market estimates of 170K.
This could be a potential sign of stronger-than-expected job growth when the NFP comes out later today, and, could bolster the USD.
The NFP results will be released today at 1:30 PM GMT.
The NFP tends to have an immediate impact on the price of the USD and many other tradable assets, such as the GBP, euro, stocks and gold. Although, you can expect the USD to be at its most volatile.
Traders can position themselves to try and take advantage of market volatility after the NFP by being on “the right side” of the published data and will buy or sell affected assets based on where they think the NFP figures will fall.
If you’re trading with us, be sure to fund your account and place your trade ahead of the NFP volatility. New to TIOmarkets? Simply sign up and create your account to start trading with a low-cost broker today.