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If you’re looking to trade the U.S. non-farm payrolls (NFP) release tomorrow at 1:30 pm GMT, then you should at least remember these points:

What happened last time?

  • November NFP up by 266K vs. 187K consensus
  • November unemployment rate dips back to 2019 low of 3.5%
  • November average hourly earnings up by 0.2% vs. 0.3% forecast
  • October NFP reading upgraded from 128K to 156K

It was a positive release all around, as both the headline NFP and unemployment rate surprised to the upside. Average hourly earnings also maintained its 0.2% monthly growth, while October’s 128,000 reading was revised to 156,000.

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

The dollar spiked higher across the board before its intraweek downtrend took over its price action.

It saw almost immediate profit-taking against the yen and returned to its pre-report levels against other counterparts before the day ended.

Not sure what labor market reports are and why they’re important? You should read this short guide on “What the Heck are Jobs Reports and Why Should I Care?

What are markets expecting this time?

  • December headline NFP to slip from 266K to 160K
  • December unemployment rate to remain at a 50-year low of 3.5%
  • December average hourly earnings to accelerate from 0.2% to 0.3%

After hitting its second highest 2019 reading in November, markets expect the headline NFP to take a chill pill in December. After all, last month’s reading might have also been boosted by the return of 46,000 General Motors employees after a month-long strike. The tight labor market is expected to speed up wage growth, however.

What are leading indicators suggesting?

Depends on who you ask.

Markit’s manufacturing PMI dipped from 52.6 to 52.4 but mentioned that “[e]mployment growth was the second-fastest since May” as firms ramped up production requirements.

The non-manufacturing PMI was also optimistic, sharing that “employment rose for the second straight month and at the quickest rate since July” as firms kept up with new order growth.

Meanwhile, ISM’s manufacturing PMI registered a deeper contraction since news of the first phase of the U.S.-China trade deal have yet to be felt. The report’s employment component also slipped by another 1.5 points for the month.

ISM’s non-manufacturing PMI wasn’t as gloomy. While the employment component dipped 0.3 points to 55.2, ISM also noted that 10 out of 16 industries reported increased employment.

Last but not the least is the ADP report, which clocked in at 202,000 when analysts only saw a 160,000 gain. November’s numbers were also revised higher from 67,000 to 124,000.

How might the dollar react?

We know from the Fed’s latest dot plot projections that members generally don’t see any interest rate changes in 2020. For now, Powell and his gang are looking at global developments and muted inflation pressures in assessing an “appropriate path” for their target range.

A quick peek at MarketMilk’s volatility guide shows that the dollar has juuust about hit its 30-day average moves against its counterparts in the last few days alone.

So, unless this week’s labor market numbers can significantly affect consumer prices down the road, they’re unlikely to cause new intraweek trends for the dollar. That means you gotta prepare for potential intraday trades like last month’s price reaction provided!