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Before we take a look at what this week’s release has in store for us, we first need to take a look back on what past NFP reports told us to see what the general trend in the labor market is. Like any other economic report, it contained both good and bad news.

On the upside, the previous NFP report was much stronger than expected. It beat expectations by 100,000 jobs, showing that a net number of 290,000 jobs were created. Some were saying that the jump was mainly caused by census hiring but, as I dug deeper into the report, it revealed otherwise. When I excluded government hiring, I found out that the change in private sector hiring was actually a positive 231,000, larger than forecast and an improvement from last month’s 123,000 increase.

Another clear sign that the labor market is picking up is that the number of part-time workers increased. Remember, companies typically put employees on probation status first for a few months before taking them in as full-fledged employees. Since October of last year, the number part-time workers has risen by as much as 150,000. Moreover, the average length of time that employees work has risen to 34.1 hours per week. More work hours translate to more income.

Despite the stronger than expected NFP figure last March, the US unemployment rate still climbed from 9.7% to 9.9%. Apparently, the recent improvements in the US economy, particularly in the jobs market, encouraged more people to join the labor force again. With more and more individuals on the hunt for jobs, hiring would have to pick up pace in order to keep up with the growing labor force. Besides, by the time the Census Bureau is almost done with the door-to-door part of its operations in July, hiring could eventually decline.

Aside from that, the underemployment rate, which includes part-time workers who want full-time positions, climbed from 16.9% to 17.1% in April. This means that, even though more people have work, they aren’t exactly happy with their current jobs and this could have a negative impact on spending.

In the meantime, the ongoing government census could still have an impact on the upcoming non-farm payrolls report. Another 508,000 jobs are expected to be added in May, mostly a result of the ongoing government census. Still, the private sector refuses to be outdone as it is expected to post a 180,000 increase in employment for the month. This could be enough to make the unemployment rate step down to 9.8%.

In the past, the release of the NFP report has traditionally been a high impact report and there’s no reason to believe that we won’t see the same now. It is, after all, the granddaddy of all economic reports! With experts predicting another round of massive job gains last month, the question that I ask is this:

Will this send the Greenback soaring even higher? Or will it spur risk appetite and boost higher yielding currencies?

This past week we’ve seen fundamentals play a more significant role. Commodity-based currencies like the Aussie and the Loonie rose yesterday on increased risk appetite, but the euro remained weak. Meanwhile, despite runs of risk aversion earlier this week, the yen got badly hit by some political turmoil.

This gives me reason to believe that traders are still risk averse, but are looking at fundamentals to help them choose the best possible investment. If the report does come in line with expectations, we may see US equities rise, which would be good for the com-dolls, whose economies have been leading the way to recovery. Meanwhile, with all the concerns surrounding the euro zone and traders not quite ready to buy up the euro, I don’t think an optimistic NFP report could make traders hungry enough to resort to the euro.

Looking into my $1 crystal ball, I think the markets should enjoy tomorrow’s report because we may be in for some less than stellar figures in coming months. As the government starts to lay off people due to the census hiring, the change in employment should take a dip. On the brighter side of things, recovery has to begin somewhere and the recent runs of improvements in the labor market may just be the start of something good.