US jobs preview: will the NFP shake dollar uptrend?

Traders are looking forward to Friday’s jobs report, yet will we see volatility for this event like months gone by? With the dollar approaching a crucial resistance level, traders are hoping this event will provide direction going forward.

US flag
Source: Bloomberg

Markets are gearing themselves up for Friday’s US non-farm payrolls (NFP) jobs report as they normally do, with many traders reducing their market exposure in anticipation of volatility, and others preparing to trade the aftermath of the release. However, this month seems somewhat different from many that have gone before due to a number of factors. Anyone following financial markets will have noticed the constant raft of geopolitical factors affecting market sentiment. For one thing, we have seen US President Donald Trump raise the possibility of a host of drastic risk events, with the heightened chance of a nuclear war with North Korea, and the possibility of a trade war between the US and China. While we have seen some improvements to both stories, we remain within a period where the landscape is changing from one day to the next. This constant shifting on such huge issues has obviously grabbed a lot of market attention, leaving many of the major economic releases seeming like small fry when compared with a nuclear war or all-out trade war.

Non-farm payrolls

Discover what the non-farm payrolls report is – including
the date of the next release, and why
it’s important to traders.

On the other side we have the fact that the US economic picture looks relatively stable, with the Federal Open Market Committee (FOMC) monetary policy outlook looking relatively predictable. The next meeting in less than three weeks comes with a market expectation of a 100% chance that the committee will raise rates. There is little chance this week’s jobs report will shift that figure much at this point. That being said, there is only one direction such a shift could occur within, pointing towards the potential volatility being heavily skewed in favour of a very weak figure. Looking at today’s ADP payrolls figure, we saw an eight-month low, with the previous month revised to even lower than that.

On the market front, the US Dollar Index has been rallying heavily over the past two months. This could be a bullish resurgence following a year to forget in 2017. However, the key to this bullish resurgence is a break through 9493. Until then, we are at a crucial crossroads and traders will be looking towards Friday’s jobs report as a source of volatility, which could see us either reverse lower or break through that key resistance level.

IGA, may distribute information/research produced by its respective foreign marketing partners 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.

This information/research prepared by IGA or IGA Group is intended for general circulation. 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 or 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. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.