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- U.S. Non-Farm Payrolls (NFP) to Increase 195K in November.

- Average Hourly Earnings to Climb to 2.7% per Annum.

Trading the News: U.S. Non-Farm Payrolls (NFP)

Non-Farm Payrolls

The U.S. Non-Farm Payrolls (NFP) report by fuel the near-term decline in EUR/USD as employment is projected to increase another 195K in November, while Average Hourly Earnings are expected to climb an annualized 2.7% during the same period.

A further improvement in labor market dynamics accompanied by signs of stronger wage growth may heighten the appeal of the greenback as it encourages the Federal Open Market Committee (FOMC) to further normalize monetary policy in 2018, and the dollar may exhibit a more bullish behavior over the remainder of the year should the central bank stay on its current course of delivering three rate-hikes per year.

However, another series of lackluster data prints may encourage the FOMC to adopt a more cautious tone at its last interest rate decision on December 13, and the greenback may face a more bearish fate if the fresh developments drag on interest-rate expectations. Interested in watching the market reaction? Sign up and join the DailyFX Team LIVE to cover the NFP report.

Impact that the U.S. NFP report had on EUR/USD during the previous release

Period

Data Released

Estimate

Actual

Pips Change

(1 Hour post event )

Pips Change

(End of Day post event)

OCT

2017

11/03/2017 12:30:00 GMT

313K

261K

-2

-51

October 2017 U.S. Non-Farm Payrolls (NFP)

EUR/USD 5-Minute Chart

EUR/USD Daily Chart

The U.S. economy added another 261K jobs in October following an 18K expansion the month prior, while the Unemployment Rate unexpectedly narrowed to an annualized 4.1% from 4.2% as the Labor Force Participation Rate slipped to 62.7% from 63.1% during the same period. A deeper look at the report showed Average Hourly Earnings also slowing to 2.4% per annum from a revised 2.8% in September, and signs of subdued wage growth may impede on the Fed’s ability to further normalize monetary policy as the central bank struggles to achieve the 2% target for inflation.

Nevertheless, the market reaction was short-lived, with EUR/USD quickly pulling back from the 1.1690 region to end the day at 1.1607. Don’t have a plan for trading the U.S. NFP report? Download and reviewing the FREE DailyFX Advanced Guide for Trading the News to learn our 8 step strategy.

EUR/USD Daily Chart

EUR/USD Daily Chart
  • EUR/USD stands at risk for a larger pullback as it snaps the monthly opening range, with the pair carving a fresh series of lower highs & lows following the failed attempt to break above the 1.1960 (38.2% retracement) hurdle.
  • The Relative Strength Index (RSI) highlights a similar dynamic as it fails to preserve the bullish formation carried over from November, with a break below the 50-Day SMA (1.1758) raising the risk for a move back towards 1.1670 (50% retracement).
  • Next downside region of interest comes in around 1.1580 (100% expansion), which sits above the November-low (1.1554), followed by the Fibonacci overlap around 1.1480 (78.6% expansion) to 1.1500 (78.6% expansion).

--- Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.

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