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Tomorrow’s the first Friday of March and you know what that means – we’ll be treated to another NFP report!

As usual, almost everyone is looking forward to finding out how many jobs were added to the U.S. labor market. There are a few reasons why market junkies are especially looking forward to February’s reading through.

First, January’s big figure has gotten investors giddy. If you remember, only a modest increase of 150,000 in jobs was seen for the month. However, the actual figure came in at 243,000!

Analysts are waiting to see if the momentum in the labor market was sustained in February. The consensus calls for an additional 208,000 jobs in the private sector, but some are extra excited and predict that it could print as high as 275,000.

But why do economic gurus have their hopes up for the February NFP report?

They say that the strong auto sales for the month could be reflected in the data. You see, analysts have pointed out that vehicle sales and job growth have been moving in tandem for the past few months which suggests that the economy may indeed be improving.

It was reported that at an annualized rate, there were 15.1 million automobiles sold during the month. That’s 1 million units more than January’s figure!

There’s also unemployment claims for the month. Market junkies have estimated that jobless claims have to average around 450,000 for the NFP to print at 0.

However, for February, jobless claims averaged well below that figure, only coming in at around 350,000 per week.

Finally, there’s the ADP report for the month which topped the 204,000 forecasts yesterday and printed at 216,000. It’s true that the ADP hasn’t been accurate in predicting the NFP report recently. However, we can’t deny that it is still a reliable directional indicator.

Now let’s get to the juicy part. How will another positive NFP report affect the performance of currencies in tomorrow’s trading?

If we take a look at the price action in last month’s release, we can see that EUR/USD spiked up by about 30 pips to test 1.3200 before falling about 100 pips.

EUR/USD 15-minute Chart

Unfortunately for dollar bulls, EU commissioner Olli Rehn later sparked optimism for the euro when he hinted that EU officials are close to reaching a deal on Greece’s second bailout package.

As it turned out, the better-than-expected NFP report only fueled risk appetite and consequently, EUR/USD traded higher to pare its losses following the data’s release.

I know that some of you might be wary of trading EUR/USD given that the Greek bond swap deal could heavily affect its price action and overall market sentiment.

But don’t worry, you don’t have to miss trading the NFP report! You might want to take a look at USD/JPY if you want to trade the news.

USD/JPY 15-minute Chart

Last month, USD/JPY jumped by 50 pips (a feat considering the pair’s ranging nature) in the next few hours after the release of the report.

Unlike EUR/USD, the dollar kept its gains against the yen until the week’s close.

If analysts are right and February’s figure prints another solid job growth for the labor market, we MAY just see the same price action for tomorrow’s release!

Of course, as I said last weekend, you can always stay by the sidelines if you’re not too sure about trading major economic reports. You can just take note of the price action to better prepare you for trading the next NFP reports.

Good luck and stay sharp in your trades!