NFP preview: will the US NFP figure outperform again?

With Friday’s US jobs report wrapping up the 2019 data, will we see another blockbuster payrolls figure?

Can the November NFP number be replicated?

Market are gearing up for a new year, yet this week will bring a nod to the year gone. Friday’s US jobs report seeks to round off a 2019 that saw non-farm payrolls (NFP) number building towards the end of the year. Coming just behind the January 2019 reading of 304k, last month’s November release provided us with the second highest reading of the year, at 266k.

The size of that monthly rise does provide some with confidence of a potential rise in the dollar, yet market expectations instead signal a likely decline to around 168k for the headline number in December. Part of that story comes from the fact that last month’s gains were exaggerated by the return of approximately 46,000 General Motors employees after a one-month strike.

Wage growth expected to remain elevated

Elsewhere, it is worth noting the fact that the US economy is enjoying a 50-year low of 3.5%, highlighting the difficulty employers will have in finding the right candidate for a job. With that in mind, there is plenty of reasoning behind the expectation of elevated earnings growth.

Markets expect to see a rise into the 0.3% level, following a decline into 0.2% last month. On a year-on-year basis, that average earnings figure currently stands at 3.1%, with the gap between earning and inflation highlighting a significant positive real wage growth evident in the US.

Technical analysis – dollar index

Looking at the weekly chart for the dollar index, we have seen the price decline below trendline support, with markets currently questioning whether we could be on the cusp of a bearish phase. A decline below the 95.33 level would certainly provide a bearish signal to the markets, with this recent decline looking like a potential retracement until that point.

On the daily chart, we are starting to see the pair turn higher following the recent drop below the 76.4% Fibonacci level. With price on the rise, we would need to see a break through 97.37 to negate the downtrend seen since the October peak.

From a payrolls perspective, an outperformance in the headline number could spark such a break to bring about a wider bullish picture. Alternatively, should we see a disappointing report, we should look out for another leg lower in this recent trend, with all eyes on whether the 95.33 support level is broken to bring a wider bearish picture.

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Start trading forex today

Trade the largest and most volatile financial market in the world.

  • Spreads start at just 0.6 points on EUR/USD
  • Analyse market movements with our essential selection of charts
  • Speculate from a range of platforms, including on mobile

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
liveprices.javascriptrequired
liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.