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It’s a new trading month and you know what that means: we take one or two days to get used to writing “02” instead of “01!” That and it’s NFP week again.

Think you’re ready to trade the dollar this week?

Not until you read these potential catalysts first!

Non-farm payrolls (Feb 5, 1:30 pm GMT)

  • The non-farm payroll (NFP) report printed a surprise 140,000 decline in December (traders were expecting a 50,000 net gain)
  • USD dipped at the news, but eventually regained its intraday highs as traders priced in FOMC’s Clarida less dovish speech and Democratic Senator Joe Manchin – whose vote is needed to pass Biden’s stimulus bill – clarifying that he said “absolutely not” to the stimmy checks being #1 priority and not to the bill itself
  • Analysts expect January’s NFP to show a net addition of 30,000 jobs
  • The unemployment rate could inch higher from 6.7% to 6.8%
  • Average hourly earnings to edge down from 5.1% to 5.0%
  • Worse-than-expected numbers would inspire worries over Uncle Sam’s recovery and highlight the importance of fiscal and monetary stimulus

Other NFP-related reports (read: potential leading indicators)

  • The ADP report (Feb 3, 1:15 pm GMT) to show 50,000 net addition in January
  • ISM’s services PMI (Feb 3, 3:00 pm GMT) seen slipping from 57.2 to 57.0
  • Challenger job cuts (Feb 4, 12:30 pm GMT) to ease from 77K to 65K
  • Initial jobless claims (Feb 4, 1:30 pm GMT) to clock in another 850K new weekly claimants

Closely watched mid-tier releases

  • ISM’s manufacturing PMI (Feb 1, 3:00 pm GMT) seen improving from 57.1 to 59.1
  • Factory orders (Feb 4, 3:00 pm GMT) to dip from 1.0% to 0.7%
  • Trade balance (Feb 5, 1:30 pm GMT) to show wider deficit in December as imports outpace exports

Overall dollar demand

  • The Fed’s dovish stance despite its upwardly revised forecasts will make it easier for traders to sell the dollar at the first signs of risk appetite
  • More losses in the equities markets can inspire profit-taking and safe-haven dollar-buying
  • PMI reports from the major economies would hint at the pace of global economic recovery and influence safe-haven demand

Technical snapshot

  • Bollinger Bands is flagging USD/JPY’s “overbought” conditions on the daily time frame
  • USD is also approaching overbought conditions against CHF, AUD, and CAD
  • The dollar is heading towards oversold status against the pound
USD Forex Pairs Bollinger Bands from MarketMilk
USD Forex Pairs Bollinger Bands from MarketMilk
  • EMAs are showing the dollar’s short and long-term bearish trends against the Kiwi and the pound
  • USD is seeing short-term bullish pressure against CHF, EUR, CAD, AUD, and JPY
  • Watch out for retracement or reversal opportunities on AUD/USD and USD/CAD
  • USD/JPY is 0.54% away from maybe turning bullish on the daily time frame
USD Forex Pairs EMAs from MarketMilk
USD Forex Pairs EMAs from MarketMilk
  • The dollar saw the most volatility against the comdolls and the pound in the last seven days
USD Forex Pairs Volatility from MarketMilk
USD Forex Pairs Volatility from MarketMilk