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NFP preview » Will Powell get the jobs downturn he wants?


Will Powell get the job downturn he wants?

Traders are split 50/50 between expecting another 75bps rate hike and a 50bps cut, so we’re likely to see some market willingness regardless. how this month’s NFP jobs report is printed.

Opening of the NFP

Following Wednesday’s FOMC meeting, it’s clear that Jerome Powell and company are still far more concerned about the “price stability” half of their dual tenure than the “full employment” half. Nonetheless, the central bank remains data dependent, so it will report on this month’s employment playing a role in the central bank’s interest rate decision at the upcoming December meeting.

With NFP reports and another CPI reading ahead of the Fed’s pro-chain interest rate decision in mid-December, it’s no surprise that traders are aware of the certainties of what’s to come. was the central bank. According to CME’s FedWatch, traders are split 50/50 between expecting another 75 basis point rate hike and a 50 basis point cut. For the October NFP report, the consensus attention is 205,000 net new employees and the highest hourly wage is expected to rise 0.3% month-over-month.

Do you care about NFPs, are they justified? We dive into the key advances from Friday’s Critical Jobs report below!

NFP forecasts

As regular readers have saved, our new focuses on four historically advanced reliable indicators to aid the handicapper in each month’s NFP report:

  • The employment component of the ISM Services PMI fell to 49.1, down from 53.0 last month and back into contractionary territory.
  • The employee component of the ISM manufacturing PMI is at 50.0, down from 48.7 million.
  • The recently revised ADP employment report came in at 239K, up from last month’s downward-revised 192K print.
  • In short, the 4-week moving average of initial jobless claims reached 219,000, slightly up from last month’s reading of 207,000, but still near multi-decade lows.

As a reminder, the state of the US labor market remains more uncertain and volatile than usual coming out of the unprecedented disruption of the COVID pandemic. That said, despite the donations and our internal models, advanced indications point to a slightly stronger reading than before this month’s NFP report, with overall job growth potentially in the 175-275K range, although ‘with greater uncertainty that never takes into account the current global context.

As it happens, month-to-month fluctuations in other respects are notoriously difficult to predict, we agree that there are many differences in forecasting (and buying them). As always, other aspects of the release, including the much-watched average hourly wage figure of 0.3% m/m in the latest NFP report.

Potential market reaction

Wages < 0.2% m/m Wages 0.2%-0.4% m/m Wages > 0.4% m/m
< 100k employees Bearish USD USD slightly lower USD slightly bullish
100K-300K jobs Bearish USD USD neutral usd bullish
> 300K employees USD slightly lower USD slightly bullish usd bullish

The US dollar index (DXY) to spend the last month consolidating between 109.50 and 113.50 the values ​​that traders presented the state of the global economy and whether the Federal Reserve will be more aggressive in raising interest rates than its main rivals. Consolidating price action and laissez-faire no strong technical bias for the global reserve currency, where if you are trading the NFP ratio, picking the right pair will be crucial.

As for potential trade setups, readers may want to consider short opportunities on the pair EUR/USD on a strong NFP reading. The world’s most-traded currency pair fell after a false break above parity (1.00) last week and broke a short-term rising trend line, opening the door for further declines to lows. October in the mid-0.9600s or even two-decade lows in the mid-0.9500s if the US labor market surprises on the upside.

On the other hand, a weak jobs report could present a short-term selling opportunity in the USD/CAD pair. Given that the general trend favors the US Dollar, the USD/CAD pair is currently holding on September and October days and could former a strong Tea and Paul pattern if it returns two day report on the idling in the United States.

By Matt Weller, CFA, CMT, FOREX.com » Official Site

Disclaimer: The information and opinions contained in the report are provided for general information only and do not constitute an offer or a solicitation concerning the sale or sale of foreign exchange contracts or CFDs. Although the information contained in this document comes from sources believed to be reliable, the author does not guarantee its accuracy and is not exhaustive, and assumes no responsibility for any direct, indirect or consequential damages that may result that he trusts such information.




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