– U.S. Non-Farm Payrolls to Climb 180K, Unemployment Rate to Hold at 7.4%
– Labor Force Participation Slipped to 63.4% from 63.5% in June
Trading the News: U.S. Non-Farm Payrolls
With the U.S. economy is expected to add another 180K jobs in August, a pickup in job growth may fuel another near-term rally in the dollar as it raises the Fed’s scope to taper the asset-purchase program at the September 17-18 meeting.
What’s Expected:
Time of release: 09/06/2013 12:30 GMT, 8:30 EDT
Primary Pair Impact: EURUSD
Expected: 180K
Previous: 162K
DailyFX Forecast: 160K to 200K
Why Is This Event Important:
Indeed, a strong Non-Farm Payrolls report may spur a more material shift in the policy outlook as the Fed sees a stronger recovery in the second-half of the year, and it seems as though the central bank is slowly moving away from its easing cycle as the world’s largest economy gets on a more sustainable path.
Expectations: Bullish Argument/Scenario
Release
Expected
Actual
ISM Non-Manufacturing (AUG)
55.0
58.6
ISM Manufacturing (AUG)
55.0
58.6
Gross Domestic Product (Annualized) (QoQ) (2Q P)
2.2%
2.5%
The pickup in business outputs along with the faster rate of GDP growth may encourage a larger-than-expected rise in U.S. employment, and a positive print may foster a more meaningful rally in the dollar as the Fed looks to scale back on quantitative easing.
Risk: Bearish Argument/Scenario
Release
Expected
Actual
ADP Employment Change (AUG)
184K
176K
Challenger Job Cuts (YoY) (AUG)
—
56.5%
Philadelphia Fed Business Outlook (AUG)
15.0
9.3
Nevertheless, the ongoing slack in the real economy may drag on hiring, and another weaker-than-expected print may threaten the bullish sentiment surrounding the reserve currency as the Fed takes a cautious approach in implementing its exit strategy.
How To Trade This Event Risk(Video)
U.S. Non-Farm Payrolls Will Be Traded LIVE in Analyst-on-Demand
Bullish USD Trade: NFPs rise 180K or more; Unemployment Rate holds steady
Need to see red, five-minute candle following the print to consider a short trade on EURUSD
If market reaction favors a sell trade, short EURUSD 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
Shift stop to entry on remaining position once initial target is hit, set reasonable limit
Bearish USD Trade: Employment misses market forecast
Need green, five-minute candle to favor a long EURUSD trade
Implement same setup as the bearish euro trade, just in reverse
Potential Price Targets For The Release
EURUSD Daily
Bearish divergence in Relative Strength Index favors downside targets
Negative slope on 10 (1.3284) & 20-Day SMA (1.3295)
Former support 1.3220 (50.0% retracement) – 1.3240 (78.6% expansion) seen as new resistance
Interim support: 1.3110 (38.2% retracement) & 1.3060-70 (50.0% expansion)
Impact that the U.S. Non-Farm Payrolls report has had on USD during the last month
Period
Data Released
Estimate
Actual
Pips Change
(1 Hour post event )
Pips Change
(End of Day post event)
JUL 2013
08/02/2013 12:30 GMT
185K
162K
+64
+89
July 2013 U.S. Non-Farm Payrolls
U.S. Non-Farm Payrolls increased another 162K following the 188K rise in June, while the jobless rate narrowed to 7.4% from 7.6% as discouraged workers left the labor force. The dismal print dragged on the dollar, with the EURUSD climbing above the 1.3250 region, and the reserve currency continued to lose ground throughout the North American trade as the pair closed at 1.3279.
— Written by David Song, Currency Analyst
To contact David, e-mail dsong@dailyfx.com
Follow me on Twitter at @DavidJSong
To be added to David’s e-mail distribution list, please follow this link
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Source: Daily fx
