We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Bullish
Oil - US Crude
Bearish
Wall Street
Bullish
Gold
Bullish
GBP/USD
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
USD/JPY
Bearish
More View more
Real Time News
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 95.72%, while traders in US 500 are at opposite extremes with 71.66%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/fRKIEW9Qe9
  • Heads Up:🇪🇺 EUR German Unemployment Claims Rate s.a. (MAR) due at 07:55 GMT (15min), Actual: N/A Expected: 5.1% Previous: 5.0% https://www.dailyfx.com/economic-calendar#2020-03-31
  • Heads Up:🇪🇺 EUR German Unemployment Change (000's) (MAR) due at 07:55 GMT (15min), Actual: N/A Expected: 25.0k Previous: -10.0k https://www.dailyfx.com/economic-calendar#2020-03-31
  • Commodities Update: As of 07:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: 4.54% Silver: 0.77% Gold: -0.38% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/3CdfglYP4g
  • #Bitcoin prices may see a pickup in volatility ahead of the 2020 halving as the #coronavirus pandemic threatens to disrupt cross-continental $BTC mining operations. Get your market update from @ZabelinDimitri here: https://t.co/BoH24MVf4P https://t.co/yuEA4wdlS9
  • Forex Update: As of 07:00, these are your best and worst performers based on the London trading schedule: 🇦🇺AUD: 0.06% 🇳🇿NZD: -0.05% 🇨🇦CAD: -0.17% 🇨🇭CHF: -0.48% 🇯🇵JPY: -0.61% 🇬🇧GBP: -0.87% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/hOyPH71ZfE
  • Indices Update: As of 07:00, these are your best and worst performers based on the London trading schedule: Germany 30: 1.85% France 40: 1.47% US 500: 0.46% Wall Street: 0.38% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/UxILaRvSdH
  • 🇨🇭 CHF Retail Sales Real (YoY) (FEB), Actual: 0.3% Expected: N/A Previous: -0.1% https://www.dailyfx.com/economic-calendar#2020-03-31
  • Missed today's #AUDUSD weekly outlook webinar? See the recording here - https://t.co/6k1KCuxr50 Some of the topics discussed were: - #coronavirus economic impact - #Fed #QE as catalyst for AUD rise - scope for renewed #USD gains
  • RT @DailyFXEspanol: Análisis del $XAUUSD: El precio del oro se estanca, ¿qué nos dice el gráfico? #trading #covid19 https://t.co/7x2Zdt0AnA…
Will NFPs Sustain S&P 500 Rally, Force EURUSD Breakout? (Infographic)

Will NFPs Sustain S&P 500 Rally, Force EURUSD Breakout? (Infographic)

2012-09-07 02:12:00
John Kicklighter, Chief Strategist
Share:

This week has proven a productive one so far for traders. With the return of Western traders from Summer break and heavy event risk dotting the economic calendar, volatility has clearly picked up and direction is slowly starting to peak through. That said, our first attempt at jump starting the long-awaited return to ‘risk trends’ was somewhat uneven. The ECB rate decision forced a bullish break to four year highs on the S&P 500, but the EURUSD failed to break the boundaries of its recent congestion (see charts below).

Will_NFPs_Sustain_SP_500_Rally_Force_EURUSD_Breakout_Infographic_body_Picture_5.png, Will NFPs Sustain S&P 500 Rally, Force EURUSD Breakout? (Infographic)Will_NFPs_Sustain_SP_500_Rally_Force_EURUSD_Breakout_Infographic_body_Picture_6.png, Will NFPs Sustain S&P 500 Rally, Force EURUSD Breakout? (Infographic)

Past NFP Reaction

Now, we are heading into the second phase of this week’s one-two fundamental punch with US nonfarm payrolls (NFPs) for August. This particular indicator certainly captures the attention of the media – but can it unify on the same fundamental path once again? Looking at the EURUSD’s reaction to the previous releases this year, there isn’t much in the way of trend generation found in the aftermath. But there have been a few instances of notable volatility that could offer us enough of a push to force 1.2650.

Will_NFPs_Sustain_SP_500_Rally_Force_EURUSD_Breakout_Infographic_body_Picture_7.png, Will NFPs Sustain S&P 500 Rally, Force EURUSD Breakout? (Infographic)

The Big Picture of US Employment

Will_NFPs_Sustain_SP_500_Rally_Force_EURUSD_Breakout_Infographic_body_Picture_8.png, Will NFPs Sustain S&P 500 Rally, Force EURUSD Breakout? (Infographic)

As we can see above, the ADP generally stands in as a simplistic benchmark for the NFPs release. The August reading was only one of seven months that private payrolls topped 200,000. That said, the ADP figures are often adjusted after the BLS release to better fit.

Will_NFPs_Sustain_SP_500_Rally_Force_EURUSD_Breakout_Infographic_body_Picture_9.png, Will NFPs Sustain S&P 500 Rally, Force EURUSD Breakout? (Infographic)

This is the chart that politicians, central bankers and long-term investors will contemplate. Where are we in the recovery from the worst financial and economic crisis in generations? Monthly increases may be hearty, but total US employment still has a long way to catch up. Is this reason for more stimulus?

Will_NFPs_Sustain_SP_500_Rally_Force_EURUSD_Breakout_Infographic_body_Picture_10.png, Will NFPs Sustain S&P 500 Rally, Force EURUSD Breakout? (Infographic)

Another deceptive measure of labor market health is the weekly jobless claims data that we follow. Thanks partially to the roll off of extended benefits for claims, we have seen a sharp drop in filings for unemployment benefits. That said, even the drop in labor participation can’t hide the jobless rate statistics.

Sector Employment Readings

Will_NFPs_Sustain_SP_500_Rally_Force_EURUSD_Breakout_Infographic_body_Picture_11.png, Will NFPs Sustain S&P 500 Rally, Force EURUSD Breakout? (Infographic)

What the Fed Sees

And of course, we can’t look at the employment statistics without appreciating what real-world impact they carry. The market is so heavily invested in the event risk not because it is showing a rapid recovery for the world’s largest economy – but rather because it offer guidance to the next potential round of stimulus from the Federal Reserve. Will this data support QE3?

Will_NFPs_Sustain_SP_500_Rally_Force_EURUSD_Breakout_Infographic_body_Picture_12.png, Will NFPs Sustain S&P 500 Rally, Force EURUSD Breakout? (Infographic)Will_NFPs_Sustain_SP_500_Rally_Force_EURUSD_Breakout_Infographic_body_Picture_13.png, Will NFPs Sustain S&P 500 Rally, Force EURUSD Breakout? (Infographic)

DailyFX Event Risk Trading Strategy:

- How should we approach and trade the NFPs given the heavy impact and fast market reaction? Read David Song’s Trading the News Article on the NFPs.

DailyFX Video of Market Backdrop and Likely Trends Through Next Week:

- Learn more of the market backdrop heading into the NFPs and why this particular piece of event risk is good for volatility but less capable of defining our next, major trend.

--- Written by: John Kicklighter, Chief Strategist for DailyFX.com

To contact John, email jkicklighter@dailyfx.com. Follow me on twitter at http://www.twitter.com/JohnKicklighter

To be added to John’s email distribution list, send an email with the subject line “Distribution List” to jkicklighter@dailyfx.com.

Additional Content:Money Management Video

Trading the News Video

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.