Non-farm payrolls look ahead

The market is gearing up for Friday’s US jobs report, which comes at an interesting time for Fed policy. 

US non-farm payrolls (NFPs) are upon us once more, with the US expecting to have added 180,000 jobs in January, an improvement over December’s 148,000. Average hourly earnings are expected to have risen by 0.3%, in line with last month’s figure.

Find out more about how NFPs affect traders.

NFPs are not quite the blockbuster event that they once were. In the financial crisis, the figure was closely watched, being a key barometer of the health, or otherwise, of the US economy. Now, the recovery is firmly in place, and jobs growth has oscillated around the 200,000-per-month line since 2012. Wages are still the missing piece in the puzzle, although even here the month-on-month figure has recovered from its October 2017 reading of -0.1%.

The main reason for continuing to watch NFPs remains the influence they will have on the Federal Reserve (Fed). The market currently expects three rate increases from the Fed, under its new leader, Jerome Powell. Markets will be watching to see if wages begin to pick up. Since the jobs recovery is done and dusted, it is the wage figure that should bear watching. A tighter labour market should prompt wage increases, although that has yet to filter through, it seems.

Find out more about how the Fed meeting will affect traders.


USD/JPY remains one to monitor, as NFPs loom on Friday. A remarkable drop in the pair has seen it head back towards the ¥108 level, an area that was staunchly defended throughout 2017 (blue rectangle on chart).

However, while we may see a bounceback here, the longer-term decline in the dollar means rallies are likely to be sold. December and January witnessed a notable series of lower highs, so we would expect bearish momentum to persist, as long as the price fails to move back firmly above ¥114. A recovery back above ¥109 should be taken as an indication that the buyers are back in charge, but it is unlikely to last.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. 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. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Find articles by analysts

This information has been prepared by IG, a trading name of IG Markets Limited and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. 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. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. International accounts are offered by IG Markets Limited in the UK (FCA Number 195355), a juristic representative of IG Markets South Africa Limited (FSP No 41393). South African residents are required to obtain the necessary tax clearance certificates in line with their foreign investment allowance and may not use credit or debit cards to fund their international account.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading CFDs with this provider.
You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.