Talking Points:
• NFPs are occasion for financial headlines, but its true market impact depends on a few factors
• Payrolls is easy to interpret, but measures like wages and participation are more fundamentally important
• A strong jobs release would impact Dollar bulls most, while a weak showing threatens the SPX most
See the DailyFX Analysts' forecasts for the Dollar, Euro, Pound and Gold through the 1Q on our DailyFX Trading Guides page.
With the USDollar at six-year highs and the S&P 500 a day's rally (at current pace) from a return to record highs, traders are looking to NFPs to generate some heat. The remarkable levels these benchmarks are treading coupled with the rising trend of volatility the past six months means the market will be in a particularly sensitive position should the event risk tap a strong fundamental current. In particular, Fed rate forecasts and financial system risk appetite are themes that will respond to meaningful changes in the labor data. Not all scenarios and asset classes equally disposed to the data however. Strong employment figures will likely generate limited potential for the likes of the S&P 500 but it can push the Dollar further. Alternatively, a weak outcome carries greater risk of a more substantive equities drop than the one that would befall the Greenback. We look at the importance of and market scenarios from the US NFPs release in today's Strategy Video.
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