NFP Friday: Your Visual Guide

The FED will be crossing their fingers for good data tonight to justify their tapering. It would also refuel speculation about interest rate rises next year...

What can we expect?

I suspect the ‘weather-effect’ we experienced over the past 2 NFP’s has thawed and for a positive jobs figure to appear. However we also have to consider if this has already been priced in by the bigger players. USDJPY has been gaining traction in the lead up to NFP and currently trading at 4-week highs, following a 5th consecutive bullish close. Any signs of even modest shortfall tomorrow could become a quick sell signal - buy the rumour, sell the fact!

I expect relatively subdued trading across the board as the markets await the NFP, with the fate of A$ lying firmly in the hands of the jobs data. If we see particularly good employment figures then I’d expect to see A$ target 0.917, 0.915. Below here it becomes more interesting as we are back within a long-term bearish channel and the corrective range seen between Dec-March.

Poor jobs figures should see A$ hold above 0.917-20 and on target to reach 0.9350, maybe as early as next week. It’s certainly enjoyed the lime light recently and there’s no immediate reason for it to have one ‘last hurrah’ for another leg higher. However whilst I am a longer-term A$ bear, I’m not afraid of the occasional baby-bull rally once in a while – which is exactly what this is in my opinion.

- USDCAD sits on 1.1 (my 'line in the sand) and I will seek bearish trades if NFP comes in below 136k.
- USDJPY also looks over extended so bearish setups will be considered below 103.80

The differential between expected and consensus (inset) tends to be 0.1 out, so whilst unemployment of 6.7% or 6.5% will move the markets the effects should be limited, as the markets look at other data for a clearer picture.

Since Jan we have seen 2 consecutive months of job creation following January's disastrous data. Last month was the first time this year we came in above expectations, but only just.

The frequency chart shows the differential between expected and consensus, with a positive number denoting above expectations and below falling short. Typically we come in +/- 40k around 47% of the time, so I am looking for differentials between +/- 60k for any sustained effects on the markets.