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Getting ready to trade the NFP like I am?

Let’s review what happened last time and what analysts are expecting for March.

What happened before?

  • Hiring in February increased by 678K vs. 407K consensus
  • Unemployment rate fell from 4.0% to 3.8% vs. 3.9% estimate
  • Average hourly earnings came in flat instead of posting a 0.5% uptick
  • January reading upgraded from 467K to 481K

Uncle Sam had back-to-back upside NFP surprises, as its jobs figure for February once again surpassed estimates.

Employment rose by 678K, enough to bring the unemployment rate down to 3.8% for the month. To top it off, the previous report enjoyed a decent upgrade from 467K to 481K.

The downside, however, is that there was no wage growth to be seen. Average hourly earnings posted a flat reading instead of increasing by the estimated 0.5% figure.

This was probably why the dollar didn’t have such a strong bullish reaction to the report. It even slid against the Aussie, Kiwi, and yen after the actual numbers were printed.

USD Pairs: 15-min Forex Charts

USD Pairs: 15-min Forex Charts

What’s expected this time?

  • March NFP to come in at 492K
  • March unemployment rate to tick lower to 3.7%
  • Average hourly earnings to show 0.4% increase

Market watchers are bracing for an increase of 492K in hiring for March, which should be enough to bring the jobless rate down a notch to 3.7%.

This time, dollar bulls are hoping to see some wage growth, with the average hourly earnings figure slated to show a 0.4% gain. Otherwise, another bleak wage reading might spur stagflation concerns!

So far, leading indicators are pointing to good results. The JOLTS job openings figure beat expectations at 11.27 million versus the projected 11 million gain while the ADP non-farm employment change came in line with consensus at 455K.

Another big upside surprise could fuel hopes of back-to-back Fed rate hikes, possibly even floating the possibility of a 0.50% increase in borrowing costs in the next FOMC meeting.

If you’re planning on trading this top-tier event, make sure you check out the average volatility of USD pairs as a guide in setting stops and targets.

But if you’re not comfortable with potential price spikes, it’s totally okay to sit on the sidelines and watch price action unfold.