It’s the first Friday of the month. And that can only mean one thing. The December release of the anticipated Non-Farm Payrolls (NFP) report. 

This month, the general market consensus estimates a market increase of 180,000 jobs. The unemployment rate is expected to be unchanged at 3.6%. 

Will the US jobs market heat up this winter?

Traders around the world are watching this month’s NFP closely, expected to be one of the last big market movers of the year.

NFP results will be released at 1:30 PM GMT.

Wednesday’s Soft ADP

Wednesday’s ADP report revealed that the private sector only added 67,000 jobs during November, well below expectations for an increase of 140,000 jobs.

The ADP is often looked to as an indicator of whether or not the NFP will beat or fall below expectations. With the ADP coming in much weaker than expectations, outlooks on the NFP is shifting.

Economists from Goldman Sachs weighed in: “The fact that job creation slowed ‘across all company sizes’ in the ADP panel also indicates some underlying weakness in November job growth.”

Not everyone agrees:

But everyone’s talking about it:

So, what can we expect?

This month’s report has been at the forefront of many investors’ minds and may cause more volatility than usual.

Usually, if the NFP is positive and trending positive, especially the average hourly earnings, traders expect to see the USD exhibit bullish behaviour. 

Higher-than-expected data is a possible catalyst depending on the inflation situation and may boost the USD ahead of the Fed’s last decision of the year.

A lower-than-expected reading following Wednesday’s ADP figures will have many expecting a weaker dollar.

The latest report showed that 128,000 jobs were added in October, which was above the 89,000 forecast. But it decreased from the previous reading of 180,000 jobs added in September. 

USD In Focus

On Wednesday, the USD was rattled following the release of weaker-than-expected ADP data. 

Monday’s US manufacturing data compounded recession fears, suggesting a decline in business activity in the services sector, driven heavily by ongoing trade tensions. The sub-component in the ISM Manufacturing PMI disappointed for the 3rd consecutive month, showing a reading of 46.6. 

Indeed, markets were expecting an improvement, however, the report indicated US manufacturing activity fell deeper into contraction, heightening fears of another wave of a global economic slowdown. 

The ISM Non-Manufacturing PMI fell to 53.9 points against an expected 54.5. However, the employment sub-component, despite a disappointing reading, proved to be somewhat an improvement, displaying a reading of 55.5, from 53.7 in October.

Meanwhile, according to a Bloomberg report, China and the US are closing in on a “phase one” trade deal, which will no doubt boost market sentiment. 

How can you be ready?

The results will be announced at 8:30am EST today.

When the NFP is announced, you can expect a price move in the following: 

USD/EUR, GBP/USD, USD/JPY, USD/CHF, any other USD denominated pair including BTC/USD and other cryptocurrencies.

The trend of job growth, the trend of wage inflation, and the trend of unemployment is far more important than any single data point on any given month – so be ready.

If you’re trading with us, be sure to fund your account and place your trade ahead of the NFP volatility. 

If you don’t have yet have an account, sign up takes just a few minutes before you can place your trades ahead of the NFP.

Dalia Hilmi
Author

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