NonFarm Payrolls

The US gained 261K jobs in October, fewer than 310K expected but with +90K worth in revisions. The hurricanes certainly distorted the data.

The bigger story is wages. Hopes from last month's big jump and upward revisions faded as October saw 0% m/m and 2.4% y/y. We are back to the same story of strong jobs growth and weak wages, similar to upbeat growth and weak inflation.

However, the Fed is still keen on raising rates and the bar is high to prevent them from doing that. One reason is expectations for inflation to eventually rise. Another is that Yellen would probably prefer to leave a clean slate for Powell, her colleague at the FOMC.

The US dollar initially fell but recovered most of the ground shed afterward.

US jobs report post-release checklist (November 3rd)

NFP Actual, Consensus and Deviation NegativeJob growth is shrinking. Average the last two months to smooth out the hurricanes and you get growth job growth of 114,000
NFP Revisions PositiveAugust and September figures were revised higher as well, suggesting that the improvement in the US labour market remains satisfactory
Unemployment Rate PositiveThe unemployment rate unexpectedly declined to 4.1%, the lowest in 17 years inflationary)
Labor Force Participation Rate NegativeDeclining from 63.1% to 62.7%. The number of people leaving the workforce caused concern on the robustness of the labor market
Average Hourly Earnings NegativeMove down from 0.3% o 0%, a sharp retreat in average earnings

More Analysis

1. EUR/USD Technical Levels

According to the Trading Positions widget (below), a moderately to strong bearish NFP release can push the pair to the 1.1650s vecinity where several sell orders are located. If surpassed, the pair will meet technical resistance at 1.1700 (monthly 38.2% retracement, daily pivot R1, daily 10-SMA, daily 100-SMA), according to the Confluence Indicator (right). In case of a very week number, positioning data shows that a break of 1.1730 would trigger stop losses and accelerate the pair to a second level of resistance at 1.1750 (monthly 61.8% Fibo, daily pivot R3).

Expect technical levels to halt the pair at 1.1580 (lower daily BB, S2 daily pivot point and 161.8% extension from ytd's range) with a moderately bullish release. A strong bullish number can trigger an assault to 1.1515 (monthly pivot S1, weekly pivot S1). Support is thin below 1.1500 from a positioning point of view.

2. Leading Indicators

US Jobs report pre-release checklist (3rd November 2017)

Previous Non-Farm Payrolls NegativeA very negative surprise (negative 3.59 deviation accordingly to FXStreet's Market Impact studies)
Challenger Job Cuts: PositiveEmployers have announced 25 percent fewer job cuts than they did in the same period last year. 
Initial Jobless Claims PositiveThe number of people filing first-time claims for state unemployment insurance decreased by 5,000 from the previous week's revised level. 
Continuing Jobless Claims PositiveThe number of individuals who are unemployed and are currently receiving unemployment benefits decreased by 15,000 from the previous week's revised level. 
ISM Non-Manufacturing PMI -ISM non-manufacturing PMI will be released after Friday’s NFP data, so will not be considered as a pre-NFP input.
ISM Manufacturing PMI Negative
The Employment Index registered 59.8 percent, a decrease of 0.5 percentage point from the September reading of 60.3 percent
University of Michigan Consumer Confidence Index PositiveConsumer sentiment slipped ever so slightly in late October, despite remaining at its highest monthly level since the start of 2004.
Conference Board Consumer Confidence Index PositiveIt showed marginal improvement in September (an upward revision), increasing again in October. The Index now stands at 125.9 (1985=100), up from 120.6 in September.
ADP Employment Report PositivePrivate sector employment increased by 235,000 jobs from September to October, better than the 200,000 increase expected

US jobs report economic indicators

Nonfarm Payrolls United States USD

Last Release

  • 209K Actual
  • 183K Consensus
  • 231K Revised from 222K Previous

Other Events

Aug 4

Average Weekly Hours

  • 34.5 Actual
  • 34.5 Consensus
  • 34.5 Previous
Aug 4

Unemployment Rate

  • 4.3% Actual
  • 4.3% Consensus
  • 4.4% Previous
Aug 4

Average Hourly Earnings (YoY)

  • 2.5% Actual
  • 2.4% Consensus
  • 2.5% Previous
Aug 4

Average Hourly Earnings (MoM)

  • 0.3% Actual
  • 0.3% Consensus
  • 0.2% Previous
Aug 4

Labor Force Participation Rate

  • 62.9% Actual
  • n/a Consensus
  • 62.8% Previous

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Significant revisions to prior months NFP expected


"Interestingly, the range of economist estimates as measured by Bloomberg for this report was also wide, the lowest estimate was 120k while the highest was 400k. Thus, we would view all predictions with a pinch of salt this month, and Friday’s reading could trigger a whipsaw market reaction when the data comes out." by Kathleen Brooks

3. Crash Course


Crash Course to Become an NFP Expert

Have you ever read news updates mentioning rising unemployment or falling payrolls yet you don’t have a clue what these mean for the Forex market?

Well, today is your lucky day the FXStreet team has been working on a research material to make you an expert in trading the NFP report.

Considered the backbone of the U.S. economy, the NFP has an history of rocking global markets, specially the FX market via the U.S. Dollar. Other signs of economic growth are often viewed with a little suspicion by market participants if employment figures are not at a healthy level.

Since the headline number for NFP tends to move all financial markets, as a trader it is important that you prepare for various scenarios, by developing models to predict the likely headline number.

To acomplish that, you should start with a solid understanding of employment conditions in the U.S. The more knowledge you have, the more confident you will feel trading the NFP. Making your own predictions, you don’t need to accept the market estimates as written in stone anymore. Besides, they are often well off the mark.

Ready to make a leap and become an NFP expert?

NFP Definition

NonFarm Payrolls report measures the number of jobs added or lost in the US economy over the last month. It is released usually on the first Friday of each month, at 8:30 EST. It is published by the US Department of Labor.

This report is important because the US is the largest economy in the world and its currency (US Dollar) is the global reserve currency. The many economies peg (tie) their currency's value to the reserve currency, many commodities such as gold and oil are priced in terms of the reserve currency and the local economy's debt is priced in terms of its own currency.

This report, because of its importance to the reserve currency, tends to move all markets: currencies, equities, treasuries, interest rates, and commodities. It does so immediately after the release of the economic data and sometimes dramatically.

US Departament of Labor

The mission of the DOL is to assure the prosperity of the wage earners, job seekers which includes more than 10 million employers and 125 million workers in the USA. 180 federal laws and several federal regulations are the key of the Departament Labor promotion of benefits and rights.

The department is led by the U.S. Secretary of Labor, Thomas E. Perez, the highest ranking official of the institution. On March 18, 2013, Perez was nominated by President Barack Obama and took office on July 23 2013 when he was confirmed by the Senate.

To Trade

Those who advocate trading NFP releases base their advice on a previous preparation and some fundamental research. The elaboration of some macroeconomical analysis is essential for successful trading.

This research includes averages of past headline NFP numbers, Weekly Jobless Claims, ISM Industry Data reports or other employment reports as the ADP or the Challenger. Tracking these events is fundamental on the preparation of the trades to set up just after the release. You can check all this data on FXStreet Economic Calendar: ADP Report, Initial Jobless Claims, ISM Industry Data.

Not to Trade

A lot more skeptical on the benefits of trading the event, as you can read in his article “Step aside the NonFarm Payrolls release”, Adrián Aquaro, President at Trader College, says its importance has decreased a little bit lately:

“Even if the impact has diminished gradually over time, still generates huge attention on the markets and it normally drives important monthly trends. Lately another event (the Fed Monetary Policy Meetings) has been driving similar attention, thanks mainly to the Interest Rates being at 0%.”

What is NonFarm Payrolls Forecast?

NonFarm Payrolls Forecast is some sentiment based piece of content that tries to predict what the NFP numbers will be and what impact will it have on the markets. In this page, you'll find some articles and tools that will help you to understand which could be the outlook for ADP Report, Unemployment Rate, Average Hourly Earnings, Labor Force Participation Rate and some other important economic indicators.

The ADP (National Employment Report) is an estimation of nonfarm employment which is based on a survey of thousands of private sector businesses. One of the biggest differences between NFP data and ADP data is the sample and methodology of the study. ADP Jobs Report could show us an anticipation of the NFP's trends. Some outlooks are mainly based on the Jobs Report, in past data and in other related job indicators like Initial/Continuing Jobless Claims.

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