Market Reaction to NFPs Shaped by ECB Reaction, FOMC Focus

Talking Points:

• The hangover of volatility following the ECB rate decision can more easily reignite activity on US jobs data

• NFPs is high-profile and known market mover, but it doesn't hit the same authority as the Dec 16 FOMC decision

• Market conditions carry more influence than technical and fundamentals heading into this event risk

Join Senior Strategist David Rodriguez as he covers the NFPs release live in the DailyFX Live Trading Room.

The last US nonfarm payrolls (NFP) report drove the USDollar to 12-year highs. This time around, we head into the November jobs figures on the back of extreme volatility and loaded with conviction of an impending Fed hike. Given the attention that relative monetary policy has drawn recently and the brisk activity level, it would seem a sure thing that this upcoming data will be a strong driver for price and likely a distinct supporter of bullish performance. However, the unexpected reaction by EUR/USD to event risk this past session that would typically be considered obvious dovish fodder will make the market rank think twice. Expectation play a significant role in reaction to event risk, and sometimes the bar is set too high - as it was with the ECB's QE upgrade. Is the Dollar long view crowded? Is a 78 percent probability of a Fed hike indicative of a discounted fundamental theme? And how will this recent surge in volatility alter the picture? We focus our discussion on the market's activity around the upcoming November NFPs in today's Strategy Video.

Sign up for John’s email distribution list, here.