Planning on taking a long weekend break?
If you do, then you’ll miss out on the U.S. non-farm payrolls (NFP) report scheduled on Friday at 12:30 pm GMT!
Check out these points if you’re trading the biggest economic release this week:
Last month’s price reaction saw whipsaws during the release
Traders knew that February’s numbers were gonna be good and they priced in their rosy expectations before the actual release.
And they were right! Easing business restrictions, fast vaccine rollout, and falling infection rates helped add a net of 379K jobs in February. Not only that, but January’s numbers were also revised way higher from 49K to 166K!
The dollar, which saw steady support from late Asian session trading up until the release, saw a bit of profit-taking that dragged it to about halfway down from its intraday highs by the end of the day.
Here are the deets on February’s numbers:
- February NFP surprises at +379K vs. +170K expected
- February unemployment rate edges down from 6.3% to 6.2%, the lowest since April
- February average hourly earnings inches up from downwardly revised 0.1% to 0.2%
- January NFP revised higher from +49K to +166K
Traders expect a lot more labor market recovery in March
- March headline NFP to clock in a whopping 680K net jobs added
- March unemployment rate could drop further to 6.0%
- March average hourly earnings seen maintaining its 0.2% rate
We’ll get more clues from the ADP report scheduled today as well as ISM’s PMIs scheduled on Thursday but right now Markit’s PMIs are supporting the optimistic expectations.
Markit noted that the sharp rise of new business has led service-related businesses to expand employment “at the quickest pace since December 2020.”
Manufacturers also continued to hire in March but at a slightly slower pace as “many firms highlighted struggles finding suitable candidates to fill vacancies.”
There are other factors to consider outside the NFP
It looks like we’ll see another strong month for the U.S. labor market in March. Question is, will it matter to dollar traders?
Remember that the Fed is ready to ignore a spike in consumer prices – which will happen if a lot of workers suddenly have jobs – in favor of keeping its easy monetary policies.
So, unless we see significantly disappointing NFP numbers, then traders will likely keep calm and trade existing dollar trends instead.
Watch out for the markets’ reaction to Biden’s infrastructure plan, the U.S. bond yield trends, and maybe some profit-taking or start-of-month positioning for a lot of the major dollar pairs.
Not sure which major currencies have the most opportunities against the dollar? Check out how the dollar has performed in the last week and compare it to its longer-term performances and volatility averages!