– U.S. Non-Farm Payrolls (NFP) to Expand 200+K for Tenth Time in 2014.
– Jobless Rate to Hold at 5.8% for Second Consecutive Month.
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Trading the News: U.S. Non-Farm Payrolls
The U.S. Non-Farm Payrolls (NFP) report may spark a bearish reaction in EUR/USD as market participants expected another 230K rise in employment paired with an uptick in wage growth.
What’s Expected:
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Why Is This Event Important:
A batch of positive developments may spark another near-term rally in the greenback especially as a growing number of Fed officials show a greater willingness to normalize monetary policy in 2015.
Expectations: Bullish Argument/Scenario
Release
Expected
Actual
Challenger Job Cuts (YoY) (NOV)
—
-20.7%
Durable Goods Orders (OCT)
-0.6%
0.4%
Gross Domestic Product (Annualized) (QoQ) (3Q S)
3.3%
3.9%
The decline in planned job cuts along with the pickup in economic activity may generate a strong employment report, and the dollar may continue to outperform against its major counterparts over the near to medium-term amid growing bets for higher borrowing-costs in the U.S.
Risk: Bearish Argument/Scenario
Release
Expected
Actual
ISM Non-Manufacturing Employment (NOV)
—
56.7
ADP Employment Change (NOV)
222K
208K
ISM Manufacturing Employment (OCT)
—
54.9
However, the employment report may disappoint amid the ongoing slack in the labor market, and the greenback may face a larger correction over the near-term as a weaker-than-expected NFP print drags on interest rate expectations.
How To Trade This Event Risk(Video)
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Bullish USD Trade: Strong Job/Wage Growth Boosts Interest Rate Expectations
Need red, five-minute candle following the release to consider a short trade on EUR/USD
If market reaction favors a long dollar position, sell EUR/USD with two separate position
Set stop at the near-by swing high/reasonable distance from entry; look for at least 1:1 risk-to-reward
Move stop to entry on remaining position once initial target is hit; set reasonable limit
Bearish USD Trade: NFP Report Falls Short of Market Forecasts
Need green, five-minute candle to favor a long EUR/USD trade
Implement same setup as the bullish dollar trade, just in the opposite direction
Potential Price Targets For The Release
Chart – Created Using FXCM Marketscope 2.0
Will retain the approach to sell-bounces in EUR/USD as price & RSI preserve the bearish trend.
Interim Resistance: 1.2600 pivot to 1.2610 (61.8% expansion)
Interim Support: 1.2280 (100% expansion) to 1.2290 (38.2% expansion)
Read More:
Key EURUSD Scalp Targets Heading Into ECB / NFPs
Gold Trading Around Year Open; Bottoming Process?
Impact that the U.S. Non-Farm Payrolls report has had on EUR/USD during the previous month
Period
Data Released
Estimate
Actual
Pips Change
(1 Hour post event )
Pips Change
(End of Day post event)
OCT 2014
11/07/2014 13:30 GMT
235K
214K
+21
+66
October 2014 U.S. Non-Farm Payrolls
U.S. Non-Farm Payrolls (NFPs) increased another 214K in October following a revised 256K expansion the month prior, marking the consecutive 9th month with an employment increase over 200K. Despite the weaker-than-expected print, the unemployment rate unexpectedly slipped to an annualized 5.8% from 5.9% during the same period to mark the lowest reading since August 2008. Moreover, the report continued to highlight anemic wage growth as Average Hourly Earnings held steady at 2.0%, and the subdued outlook for inflation may encourage the Fed to retain its highly accommodative policy stance for an extended period of time in an effort to foster a stronger recovery. The greenback largely struggled to hold its ground following the mixed print as EUR/USD held above the 1.2400 handle going into the European close, with the pair ending the day at 1.2453.
— Written by David Song, Currency Analyst and Shuyang Ren
To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.
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Source: Daily fx