The NFP report is back to shake the markets this week! Can the dollar finally get uniform price action over the next couple of days?
Here are events you should watch out for if you’re planning on trading the Greenback:
The start of another trading month means we get to see Uncle Sam’s latest non-farm payrolls report!
If y’all recall, the economy added a whopping 304,000 jobs in January, higher than the downwardly revised 222,000 jobs added in December and analysts’ expectations of 165,000. And that’s during a partial government shutdown, yo!
The shutdown didn’t seem to significantly affect estimates on employment, hours, and earnings though it did push the unemployment rate from 3.9% to 4.0% as furloughed employees were classified under unemployed for a while.
On Friday at 1:30 pm GMT analysts are expecting the unemployment rate to go back down to 3.9% while hourly earnings is expected to accelerate by 0.3%. The actual NFP is expected to come in at 163,000 after coming in strongly in January.
Before we get the NFP data, you can get clues from reports coming our way in the next couple of days. The employment component of ISM’s non-manufacturing PMI (Mar 5, 3:00 pm GMT), for example, has shown some correlation with the NFP’s trends.
The ADP report (Mar 6, 1:15 pm GMT) is also widely considered as a leading indicator for the NFP report, while reports like the Challenger job cuts (Mar 7, 12:30 pm GMT) and the revised non-farm activity (Mat 7, 1:30 pm GMT) can also provide clues on the labor market’s trends.
FOMC member speeches
One of the reasons why the dollar strengthened last week was because Fed Chairman Powell chose to highlight that the economy is “in a good place” rather than emphasize the reasons why he and his gang are choosing to be “patient” in tightening their policies.
But that was last week. Over the weekend the POTUS upped the pressure on Powell to be a bit less hawkish when he shared that he wanted a weaker dollar. And if there’s any doubt as to whom he’s addressing, Trump also referenced “a gentleman that likes raising interest rates in the Fed,” or one who “likes a very strong dollar in the Fed” in his speech.
Will Powell and his peers bend to the pressure to drag the dollar lower this week? Voting members Eric Rosengren (Mar 5, 12:30 pm GMT), John Williams (Mar 6, 5:00 pm GMT), Lael Brainard (Mar 7, 5:15 pm GMT), and Chairman Powell himself (Mar 9, 3:00 am GMT) will take center stage over the next couple of days.
If they underscore their need to be “patient” with hiking their rates, then we could see the dollar head lower across the board. But if they take cues from Powell’s optimism last week, then the dollar could climb higher against some of its counterparts.
Missed last week’s price action? Read USD’s price recap for Feb. 25 – Mar. 1!