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Since we’re in for a shortened trading week, the U.S. economy will be releasing its non-farm payrolls report on Thursday before traders take off for the Fourth of July holiday on Friday. The forex fireworks might start early, folks!

What’s expected for the upcoming NFP release?

Analysts estimate that the U.S. economy added 214,000 jobs in June, slightly weaker compared to the previous month’s 217,000 increase in hiring. With that, the unemployment rate is likely to hold steady at 6.3% while average hourly earnings could show another 0.2% uptick. Of course market watchers are also gonna keep tabs on changes in the participation rate, as this gauges whether or not Americans are leaving the labor force and giving up looking for full-time work.

Will the actual report be a hit or miss?

The freshly released ISM manufacturing survey hinted at a possible standstill in hiring for June. The PMI dipped from 55.4 to 55.3, with the employment component unchanged at 52.8 – weaker compared to the estimated 53.2 reading. The Philly Fed index showed a strong improvement in its employment component while the Empire State index printed a decline.

Meanwhile, the consumer confidence index showed that individuals became more optimistic with their employment outlook for the same month, with a smaller share of folks reporting that jobs were difficult to get. Talk about getting mixed signals, huh?

How could the U.S. dollar react to all this?

A quick look at the major forex pairs’ latest price action shows that the Greenback has been getting trampled on, thanks to a nasty combination of risk-taking and bleak U.S. data. Heck, even if Uncle Sam manages to print a decent enough economic figure, it appears that traders aren’t impressed! This is probably because the latest FOMC statement pretty much set the record straight when it comes to monetary policy and interest rate expectations, sending a clear signal that the Fed isn’t even considering tightening just yet.

USDX Daily Forex Chart
USDX Daily Forex Chart

With that, a dollar selloff might still be more likely than a rally, unless the actual NFP report prints very impressive results. Although hiring gains have been picking up steadily, market watchers would rather see a much faster pace of jobs growth enough to make up for the slowdown during the first few months of this year.

If you’re planning on trading this event, make sure you’re ready for quick moves, as traders might be eager to book their profits off their NFP trades right before the long weekend. If volatility ain’t your cup of tea, there’s no shame in sitting on the sidelines and just watching price action unfold. Good luck!

What’s your game plan for the NFP release? Share your thoughts in our comment box or cast your votes in our poll below!