Finally Friday is upon us and the opportunity to find out more about the US labor market is here as we know how significant the US Non-Farm Payrolls report can be today for the outlook of the US Dollar over the medium to long term. Ultimately today’s report can be the spark that the Fed needs in order to decide to pull the trigger and raise their interest rates during their meeting later this month.
However to make it clearer for our readers for the Fed to do so they will have to be 100% satisfied with the performance of the domestic labor market which will require several things to go right: it will require a healthy number of added jobs in the economy, it will require that the unemployment rate goes down or at least remains at its current low levels and that the average earnings component improve at a healthy pace.
So you see there are quite a few things that have to go right for the Fed to move forward and we’re explaining this as the market’s reaction after today’s report will hinge on how many of these factors were met. If the report hits all marks then we should expect an explosive Dollar rally across the board but if the report misses a few points or prints out mixed then we could see a mild weakness on behalf of the buck.
Over the last 24 hours the major instruments we monitor in our daily reports kept relatively quiet and treaded water ahead of today’s event. Traders don’t want to engage into any important trading decision at the last minute and actually prefer to remain on the sidelines until they get a clearer outlook for the Dollar and the domestic US economy.
The Euro traded between 1.1150 and 1.1200 with reduced volatility and price action, a bullish NFP report should hit the 1.1100 level pretty fast and further lower the 1.1000 is the next area of focus while a miss should send the Single currency towards the 1.1300 area at first and then towards the 1.1400 highs of last month.
The Cable spent yet another day under pressure and didn’t attempt to correct against the Dollar even though it remains on a bearish bias for 2 straight weeks now. Further pressures from a bullish NFP reading will weigh down on the Cable and the next level to hit is the 1.5000 support floor while a surprise to the upside will expose the 1.5300 area.
Economic Calendar
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