Are high expectations for March’s NFP warranted?

March’s non-farm payroll figure is expected to come in at 200,000. We have not seen expectations above this level since March 2012.

Today’s figures, due out at 1.30pm (London time), are set to be an improvement on last month’s 175,000, though, as always, the revision will be closely monitored. Recent history shows that the market has not been all that adept at predicting the number but the release itself will ultimately set the tone for the afternoon trading session. Unemployment levels are expected to tick down to 6.6% from 6.7%.

Given that the unseasonably cold weather in the US has been blamed for much of the data misses in recent months, market participants will be looking for some clarity and vindication surrounding the Federal Reserve’s plan to decrease the current quantitative easing programme by $10 billion per month.

Should the number exceed expectations wildly – say by venturing closer to the 300,000 mark – the Fed could be spurred to expedite the QE tapering and this would not bode well for risk assets. Anything lower than 150,000 jobs would be perceived as bad news and would tend to undermine the weather-related excuses, given that recent temperatures have been improved.

Given that US indices are at, or near, all-time highs, and indeed the fact that markets have seen a bumper-week in terms of bullish momentum and upside, we may well see traders taking some money off the table going into the weekend.

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