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Planning on trading the U.S. non-farm payrolls (NFP) report tomorrow at 12:30 pm GMT? If you are, then here’s a quick trading guide for you!

What happened last time?

  • September NFP down from 168K to 136K vs. 145K expected
  • September jobless rate drops to 50-year low of 3.5%
  • Avg. hourly earnings stagnates in September
  • August NFP revised higher from 130K to 168K

The unemployment rate dropped to a 50-year low of 3.5%, but the headline NFP and earnings numbers came in weaker than expected AND weaker than August’s numbers.

USD 15-Minute Forex Charts
USD 15-Minute Forex Charts

Not surprisingly, the dollar pulled back most of its U.S. session gains by the end of the day.

What are traders expecting this time?

  • October NFP to weaken from 136K to 85K
  • October jobless rate to inch back up to 3.6%
  • October hourly earnings to accelerate from 0.0% to 0.3%

Analysts expect further slowdown in hiring in October as businesses continue to take hits from the U.S.-China trade war. Of course, it doesn’t help that at least 45,000 General Motors employees were on unpaid strike for the month.

What are the odds of a weak reading?

Pretty bigly. The ADP report – a survey for smaller businesses that are likely more affected by the trade war – clocked in 125,000 increase. What’s more, it also downgraded its September reading from 136,000 to 93,000!

Markit’s reports were a bit more optimistic. The manufacturing PMI hit a six-month high of 51.5 thanks in part to “hopes of a recovery in global trade conditions.”

Meanwhile, the services PMI hit its highest reading since July. However, the report also noted that jobs are being lost “at a rate not seen since 2009,” and that its employment gauge points to NFP slipping below 100,000. Yipes!

How might the dollar react?

We know from Powell’s speech yesterday that the FOMC gang isn’t thinking about raising their rates any more anytime soon. That leaves holding or cutting their rates as their next possible moves.

If Friday’s numbers come in much weaker than analysts had expected, then we could see the dollar continue to take hits across the board as traders price in a report that could make the Fed “materially reassess” their outlook.

But if tomorrow’s labor market reports surprise to the upside, then the Fed would have one less thing to worry about and one more reason to NOT go back to its interest rate cutting ways anytime soon.