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DailyFX US AM Digest: Expectations Starting to Take Shape for Friday’s US NFPs

DailyFX US AM Digest: Expectations Starting to Take Shape for Friday’s US NFPs

Research, Research Team

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The US Dollar has taken back some of its losses today following the release of the ADP Employment Change report for September. Despite a relatively low reading at +135K, the September labor figures are heavily distorted by the collective impact of the hurricanes last month. In reality, the forthcoming jobs data won’t necessarily reveal anything pertinent about the underlying state of the US labor market. Overall, the US Dollar’s rally has been spurned by the dip in US Treasury yields, as the economic calendar has been rather quiet thus far this week.

DailyFX Economic Calendar: Wednesday, October 4, 2017 - North American Data Releases

Data remaining on the North American calendar today carries high importance for the US Dollar, particularly in shaping expectations for Friday’s September US Nonfarm Payrolls report. The ISM Non-Manufacturing/Services report will make up the second leg of key information needed to formulate an estimate for Friday’s jobs data. Using a rolling 10-year simple linear regression model, the ADP report and the ISM Services report can account for 89% of the variation in the headline NFP figure (R^2 = 0.89).

DailyFX Webinar Calendar: Wednesday, October 4, 2017

IG Client Sentiment Index Chart of the Day: USDJPY

Learn more about the IG Client Sentiment Index on the DailyFX Sentiment page

USDJPY: Retail trader data shows 49.7% of traders are net-long with the ratio of traders short to long at 1.01 to 1. The number of traders net-long is 6.0% lower than yesterday and 7.1% lower from last week, while the number of traders net-short is 3.9% higher than yesterday and 13.6% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests USDJPY prices may continue to rise. Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger USDJPY-bullish contrarian trading bias.

Five Things Traders are Reading

  1. “GBP/USD – Failed Bounce May Drive Short-term Volatility Higher” by Paul Robinson, Market Analyst
  2. ”US Dollar Weighed by Pullback in US Yields; Key Data Today” by Christopher Vecchio, CFA, Senior Currency Strategist
  3. “Silver Price Lower Before Higher, Gold Support Down Near 1250” by Paul Robinson, Market Analyst
  4. “Upbeat ISM Non-Manufacturing Survey to Fuel Bearish EUR/USD Sequence” by David Song, Currency Analyst
  5. “GBP/USD Rises as UK Services PMI Beats Expectations” by Martin Essex, MSTA, Analyst and Editor

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