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Think the fireworks are over for this week? Think again! With the November NFP figure up for release this Friday, there’s a good chance the forex market will end this week with a bang! Here are some things to take note of if you’re planning to trade this economic event:

1. USD has been reacting to fundamentals rather than risk.

Thanks to the Fed taper theme, the U.S. dollar has been more sensitive to fundamental data these days. In other words, strong U.S. economic figures typically inspire a dollar rally while weak reports tend to spark a selloff. Just take a look at how the USDX fared in the last two NFP releases:


Last October, the release of the September jobs figures was delayed because of the U.S. government shutdown. At that time, traders were confident that the FOMC would delay the taper because the shutdown was likely to result to weak hiring and growth. With that, traders showed no love for the dollar when the NFP report printed weaker than expected results!

usdx_novHowever, tables turned in November when the October NFP report beat expectations. Prior to this, the U.S. economy boasted of a better than expected GDP figure, which meant that traders were feeling giddy about the Fed’s taper prospects back then.

2. Early indicators hint at strong gains in hiring.

If you’ve been watching the forex calendar closely this week, you’d know that the ADP non-farm employment change report printed an impressive 215K rise in hiring, higher than the estimated 175K increase and the previous month’s 184K figure.

Aside from that, the employment component of the ISM manufacturing survey surged from 53.2 to 56.5 – its highest level since April 2012!

3. Analysts expect slightly weaker jobs growth.

For the November NFP report, the consensus is a 180K rise in employment, which is lower compared to the previous month’s 204K gain. Some say that the surprisingly high October NFP figure might also be subject to significant downward revisions, which could be very negative for the U.S. dollar.

Also, take note that the jobless rate is projected to improve from 7.3% to 7.2%. However, this might be chalked up to another decline in participation rate, which is indicative of deteriorating labor market conditions. After all, a larger number of people leaving the workforce signals a lack of confidence in job prospects.

That’s all, folks! Sort of a mixed bag, huh? All I know for sure is that this release could cause quite a ruckus in the charts so make sure you account for potential volatility in setting your stops. Good luck and good trading!