So the FOMC event pushed the dollar higher yesterday.
Will this week’s U.S. non-farm payrolls (NFP) reports seal the deal for a positive week for USD?
Here are points to know if you’re planning on trading the event:
What happened last time?
- NFP added a net of 263K jobs in September vs. 250K expected
- The unemployment rate unexpectedly dipped from 3.7% to 3.5%
- Average hourly earnings maintained its 0.3% monthly increase
- Labor force participation rate slipped from 62.4 to 62.3
Uncle Sam added a net of 263K jobs in September, which was slightly higher than the 250K addition that markets had priced in.
Meanwhile, the labor force participation rate dipped from 62.4% to 62.3% and contributed to the unemployment rate (unexpectedly) edging lower from 3.7% to 3.5%.
Overall, the numbers pointed to a tight labor market. Good news for the Fed, bad news for risk-takers who were trying their best to manifest a Fed pivot.
USD jumped against its major counterparts and ended the week near its intraweek highs.
USD/CAD initially fell on the back of Canada’s (strong) labor market numbers but the pair eventually reflected USD’s strength.
USD 15-Minute Forex Chart Overlay
What’s expected this time?
- NFP to clock in at 240K in October
- Unemployment rate to tick higher from 3.5% to 3.6%
- No changes to 62.3% labor force participation rate
- Average hourly earnings still at 0.3%
Market bees are buzzing about the labor market not being as tight in October.
The NFP is expected to show only a 200K – 240K gain while the unemployment rate could inch higher from 3.5% to 3.6%.
Leading indicators are pointing to another direction, however.
The employment component of ISM’s manufacturing PMI improved from 48.7 to an expansionary reading of 50.0 in October.
The U.S. Job Openings and Labor Turnover Survey (JOLTS) reported further gains in job openings, clocking in at 10.7 million against September’s 10.28 million figure.
Meanwhile, this week’s ADP report surprised to the upside. It showed 239K jobs created in October (from September’s 192K reading) as restaurants, retailers and the travel sector ramped up hiring in advance of the year-end holidays.
Last but not least, the employment component of ISM’s services PMI – which is considered an accurate leading indicator for NFP – went up 2.8 points to 53.0 even as employers noted difficulties in finding qualified applicants.
So, it doesn’t look like we’ll see significant slowdowns in the U.S. job market. Will this affect USD’s intraweek trends?
Planning on trading the dollar but not sure which USD pair to trade? Check out the major USD pairs’ performance and take a look at USD pairs’ average volatility see if you can spot trading opportunities!
