With the heavily debated September FOMC date approaching, this month’s NFP attention is at fever pitch. Recent Fed dovishness and a lack of bumper US economic data, amidst a backdrop of growing concern over a global slowdown, have pushed out the expectations of many market participants with attention turning to December and beyond. Broader issues at play are likely far more influential on the Fed’s decision process at this stage and so the only real impact from the NFP this week will be on a shocking miss or a bumper upside print.
The typical reactions and volatility we see are to be expected. There is the likelihood of acute surge of USD strength on a strong beat with players looking to position on any remaining chance that the Fed will lift off in September. Likewise, a big miss today will likely be interpreted as the final nail in the coffin of a September rate hike.
The Reuters poll analyst expectations are as follows:
- 220k Average
- Min of 170k
- Max of 265k –
So pretty evenly split there yet slightly lower on the downside.
Let take a look at how some of these number could play out
170k – 200k
- A miss of this stature would be a detrimental blow to the speculative positioning in place for a September rate hike and allow for further advancement against USD. GBPUSD has been sold quite sharply in recent weeks and is now sitting against the 50% retracement from the 2015 lows to highs against 1.5240s, an area which could act as decent support. A miss in this region would likely take the pressure off GBP for now and allow for advancement higher with resistance overhead at the 1.5331 July low an initial target and the 1.5420 mid August low beyond.
200k – 230k
- A print around the expected number whilst lacking the bumper upside need to encourage fervent upside conviction should see USD maintain mild strength. Questions still hang over a September rate hike and a print in this region would neither derail the decison of confirm it. The ECB’s announcement yesterday of an increase in their QE package should pave the way for EURUSD to move lower against decent USD buying though given the stronger dynamics at play in EURUSD trading currently, this move is likley to be capped against the rising trendline from 2015 lows coming in around 1.0950s
230 – 270k
- A beat of expectations, certainly weighted more toward the top of this range would spark an enthusiastic surge of USD buying by those hopeful that a September rate hike is still in play. With Oil approaching the long term descending trendline there is the likelihood of pricetaking another leg lower and thus taking the Candian Dollar lower too. Further declines in Oil prices add weight to the argument that the BOC will cut again this year and as such , USDCAD is a good expression of USD upside in both the short and medium term.Overhead trendline resistance around 1.35 presents a good initial target
Make sure to tune in tomorrow for our Live NFP webinar where will be covering the release and looking to trade using the strategy detailed in our exclusive NFP Trading Guide.