NFP Preview: Higher Or Lower?

The ever important NFP figures are out shortly and with market anticipation of a Fed lift-off reaching fever pitch, today’s release is even more important.Given the recent strength in employment prints, some analysts are looking for a high number, indeed the average of the last five figures sits atop 300k
united-states-non-farm-payrollsIf we see another strong employment print today then the FOMC will remain one of the most hawkish of the G10 Central Banks and Dollar strength will see renewed conviction. Should today’s release disappoint, we could a clearing of widely held USD longs especially so considering anticipation that recent bad weather in the US will have had a dampening effect of economic indicators. However, any weather induced shortfalls in today’s number’s will be compensated for at a later date and shouldn’t do much to deter Dollar upside over the medium term.So, lets take a look at some possible scenarios arising from today’s figure and some potential trades.


300k And Over

– A figure of this magnitude would push a potential June rate hike into question with the Fed likely gaining the confidence it needs to remove the much disputed “patient” from it’s March statement. If we see a high print, look to sell EURUSD on a break of 1.0900

250k – 300k– A figure in this band is still likely strong enough to keep a June hike in the running especially whilst considered alongside market-based measures of inflation expectations which have rebounded now from the lows. Look to go long USDJPY on a break of 1.2060
200k – 250k-Market consensus lies in this band. No major surprise here and although still consistent with a strong labour market expect prior month revisions and average hourly earnings growth to take the lead here. Not expecting much directional bias from a print in this region. No trade

150k – 200k

– A disappointment of this scale whilst concerning given the recent strong of strength seen out of employment prints, shouldn’t push rate hike expectations too much further out from the already priced in September lift off. However, we could see the FOMC confirm that their stance on the labour market might shift which would weaken Dollar prospects.
Given the BoE’s relative hawkishness, a figure in this band should setup Long GBPUSD opportunities

150k Or Worse

– A print this low regardless of weather induced effects could seriously damage expectations of a June hike and also threaten the Fed’s will to remove “patient” from it’s March statement.
The BoC kept rates unchanged at it’s latest rate setting meeting and alongside indicating an improvement in it’s inflation outlook the BoC also hinted that monetary policy might not need any further easing. As such, a figure this disappointing should see USDCAD head lower in the short term creating scope for decent USDCAD shorts. 

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