NFP Expectations for April

Talking Points

• NFP is historically a volatile event
• Last month’s miss caused the EURUSD to decline over 118 pips
• Expectations for this Friday sit at 248k

NFP (Non-Farm Payrolls) figures are released monthly and is one of the markets most highly anticipated events. This event tracks monthly changes in employment in the United States, and gives traders a glimpse into the health of the economy. Also, it should not be overlooked that the FED (Federal Reserve) looks to these employment numbers to influence their decisions regarding monetary policy.

Below we can see a series of the 12 previous NFP totals graphically displayed. While these numbers have been mixed, it is important to see what effects they can have on the Forex market. So how can NFP affect the market, and what are the expectations for Friday’s event? Let’s take a look.

The previous NFP event transpired last month on March 6th. To review, expectations were set at 235k, but on release the figures surprised the market. As seen in the graph above, the total amount of new jobs outside of the agricultural sector came in at 293k. This beat of expectations quickly drove traders to accumulate the US Dollar against the majority of major currencies.

Below we can see the price action for the EURUSD during the March NFP event using a 30 minute chart. Immediately after the announcement, prices formed a new lower high for the week at 1.0988. This rise in price only lasted seconds, as traders began to accumulate US Dollars on the news. This caused prices to drop as much as 118 pips over the next 30 minutes. Not only did the EURUSD decline for the day, this event caused the EURUSD to continue its trend and form a new monthly low in the following trading week.

So what can we expect for Fridays trading?

The next NFP event is set for this Friday April, 3rd at 8:30 am New York time. After reviewing last month’s release, it makes sense for traders to be on their guard for unexpected volatility at this time. Currently expectations are set for 248k. Traders should primarily focus on whether or not NFP beats or misses expectations. By using last month as a model, a beat above expectations could cause another major US Dollar rally. Conversely, if prices miss expectations, it could signal a sell off for the US Dollar against other Major G8 currencies.

If you are interested in trading NFP or just looking to follow the event as it progresses, join DailyFX live inside of our Real-Time News Coverage Trading Room. Our live NFP event starts at 9:00am New York time and you can register using the link below.

NFP Live Coverage Registration

---Written by Walker England, Trading Instructor

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