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Are y’all ready for NFP Friday?

Better read up on what happened before, how the dollar reacted, and what’s expected this time if you’re trading this big event!

What happened before?

  • Hiring increased by 210K vs. 553K forecast in November
  • Unemployment rate fell from 4.6% to 4.2% vs. 4.5% consensus
  • Average hourly earnings slid from 0.4% to 0.3% instead of holding steady
  • October NFP reading was upgraded from 531K to 546K

Uncle Sam printed a disappointing November NFP figure, with employment up by a meager 210K or less than half the projected 553K increase.

Still, this was enough to bring the jobless rate down from 4.6% to 4.2% for the month, much lower than the expected 4.5% reading.

Even better, the labor force participation rate actually improved to 61.8% to reveal that more folks are returning to the jobs market.

However, average hourly earnings was slightly disappointing since it fell from 0.4% to 0.3% to reflect lower wages.

Components of the November NFP report indicated that employment gains were seen mostly across the board, with the exception of the retail sector.

What’s expected this time?

  • December NFP to come in at 426K
  • Jobless rate to dip even lower from 4.2% to 4.1%
  • Average hourly earnings to tick back up to 0.4%

Market watchers are counting on a pickup in employment at 426K in December, as the holiday shopping season likely boosted retail hiring.

This should be enough to bring the unemployment rate even lower to 4.1% and boost average hourly earnings back up to 0.4%.

As of this writing, leading indicators are looking mixed.

The ADP non-farm employment report printed a whopping 807K jump in hiring, surpassing the consensus at 405K and the earlier figure of 505K.

However, the JOLTS job openings figure fell short of estimates at 10.56M versus the 11.06M projection and earlier 11.09M reading. This suggests that employers probably didn’t step up their hiring activity for the month.

Meanwhile, the ISM manufacturing PMI came in weaker than expected at 58.7, but the jobs component posted its fourth straight monthly climb to reach 54.2.

Weekly initial jobless claims are also mixed, although most weeks of December posted better than expected results.

With that, it’s looking like there’s a slight chance for an upside NFP surprise later this week, which might spur more gains for the Greenback.

Keep in mind that the Fed is shifting to a more hawkish stance in figuring out their tightening timeline for this year.

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.