Partner Center Find a Broker

Planning on trading the NFP this week?

Here’s what you need to know about the previous report, how the dollar reacted, and what’s expected this time.

What happened before?

  • March employment rose by 916K vs. market consensus at 652K
  • Jobless rate dipped from 6.2% to 6.0% as expected
  • Average hourly earnings fell 0.1% vs. projected 0.1% uptick

Uncle Sam printed another set of stellar jobs gains of 916K in March, following a strong upside surprise back in February. This was enough to bring the unemployment rate down from 6.2% to 6.0% for the month.

To top it off, the results for the past couple of months were revised higher by a total of 156K, reflecting positive momentum in the U.S. labor market. Analysts say that the gradual reopening of the economy and the warmer weather contributed to the gains in hiring.

On a slightly less upbeat note, wages dipped lower on average while the labor force participation rate barely budged at 61.5%.

These didn’t stop the scrilla from having a strong bullish reaction to the headline numbers!

USD Forex Pairs 15-min Charts
USD Forex Pairs 15-min Charts

The U.S. currency was able to sustain the rally across the board for the next few bars before the major pairs consolidated throughout the rest of the session.

What’s expected this time?

  • April NFP projected to show nearly 1M rise in employment
  • April jobless rate slated to dip from 6.0% to 5.8%
  • Average hourly earnings to stay flat for the month

It looks like market watchers are setting the bar pretty high for the April NFP, projecting 990K in hiring gains and another dip in the unemployment rate for the month.

And who could blame them? The vaccination rollout is progressing well across most U.S. states while business and consumer activity appear to be slowly recovering to pre-pandemic levels.

This could result to another noteworthy bump in hiring among hotels and restaurants, as well as the retail sector. Some even say that this was enough to have added MORE THAN A MILLION JOBS for April!

Leading indicators, however, aren’t looking too good.

The ISM manufacturing PMI for April fell short of estimates, dropping from 64.7 to 60.7 instead of improving to 65. Underlying components reveal a dip in the employment index from 59.6 in March to 55.1.

The ISM services PMI for the same month also turned out to be a disappointment, as the reading slipped from 63.7 to 62.7 versus the 64.2 consensus. The jobs component managed to tick higher from 57.2 to 58.8, though.

Lastly, the ADP non-farm employment change report also printed a downside surprise at 742K versus the estimate at 872K. Then again, the March reading was revised from 517K to 565K, so we could see a similar outcome for the actual NFP.

In a nutshell, dollar traders are setting high expectations for the April NFP, but leading indicators are hinting at a possible downside surprise.

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.