Nonfarm Payrolls Preview: not a game-changer for Fed, but set to rock the market anyway

US October employment data is due this Friday, after plenty of first-tier events that so far represented nothing in terms of price action when it comes to the EUR/USD pair. The FOMC monetary policy meeting that took place earlier this week was a non-event, providing no changes to what the market now foresees: a rate hike in December and at least one more for 2018. Policymakers referred to a "solid" economy and acknowledged inflation remains soft. Could then the Nonfarm Payroll report be a game changer? Clearly not, because the problem is and has always been inflation, not employment.

The Dollar is strong and near multi-month highs against most of its major rivals, despite the previous Nonfarm Payroll report was disastrous, with the economy losing 33,000 job's position in September. The hurricanes that hit the country during the month lessened the effect of the awful number in the FX board. That said, the immediate reaction to the report is no longer a trend-setter as it was many years ago.

Still, the report will bring some intraday action, which is expected to be more relevant if it is Dollar's positive, as it will be aligned with market's sentiment/the dominant trend.

The US economy is expected to have added 312K new jobs in October, a stark contrast to the previously mentioned decline. The unemployment rate is seen unchanged at 4.2%, a multi-decade low, while average hourly earnings, also a positive surprise last month that partially offset the negative headline, are seen growing by 0.3% monthly basis, against previous 0.5%. Wages grew by 2.9% yearly basis, close to the 3-4% range that the Fed sees as "healthy".

The ADP survey released last Wednesday suggests that the upcoming numbers will be strong, as according to it, the private sector added 235K new jobs in October, largely above a previous revised to 110K or the expected 200K.

Anyway, a reading above the expected 312K seems unlikely as it's too high, but anything above 240K should be considered dollar positive. Wages, as usual, will be key as a decline there will probably hit the greenback, as wages are correlated to consumption and therefore inflation.

EUR/USD levels to watch

Ever since the week started, the pair has been confined to a tight range below the 38.2% retracement of the latest daily decline, now challenging it as Wall Street plunges, after the GOP unveiled its tax-reform plan. The bill is mostly positive for equities, as seems the corporate rate will be chopped straight to 20% with no phases in between. The decline seems mostly due to the market not believing it could happen.

Anyway, from current levels, the pair has a relevant resistance around 1.1740, the 61.8% retracement of the latest decline. That's where the pair has its 20 DMA on the daily chart. Indicators in the mentioned chart have recovered from oversold levels, but remain within negative territory, suggesting the pair could extend its current upward corrective movement. Beyond the mentioned level, the recovery can extend up to the 1.1800 figure, ahead of last Thursday's high of 1.1836. The risk will turn towards the downside on a break below the 1.1600 figure, while the pair will gain bearish strength on a break below 1.1575, Friday and October's low, leaving doors open for a test of 1.1460 next week. 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news

Latest Forex Analysis

Latest Forex Analysis

Editors’ Picks

EUR/USD climbs above 1.1250 as investors eye coronavirus headlines

EUR/USD preserved its recovery momentum early Friday and rose above 1.1250 during the European trading hours. Markets are doubting the Fed's policy tightening prospects as the new coronavirus variant revives concerns over the economic recovery losing steam.


GBP/USD rebounds toward mid-1.3300s on broad dollar weakness

GBP/USD reversed its direction after dipping below 1.3300 earlier in the day and started to push higher toward 1.3350. The greenback is facing heavy selling pressure amid the sharp decline witnessed in the 10-year US Treasury bond yield.


Gold clings to strong gains above $1,800 as US T-bond yields plunge Premium

Gold staged a decisive rebound on Friday and reclaimed $1,800. The intense flight to safety is causing US Treasury bond yields to fall sharply and fueling XAU/USD's rally. Investors await news on vaccines' effectiveness against the new COVID variant.

Gold News

Cardano could tank to $1 if ADA fails to defend crucial support

Cardano price is currently hovering below a freshly shattered 6-hour demand zone, ranging from $1.68 to $1.79. This resulting crash could extend to the immediate and critical foothold at $1.40. 

Read more

Black Friday 2021 Discounts!

Do you want to take your trading skills to the next level? Now you have a chance of leaping forward at attractive introductory rates. For Black Friday, FXStreet is offering discounts of up to 50% on its upgraded Premium plans. 

Subscribe now!