THE NFP REPORT IS EXPECTED TO BREAK ABOVE 200,000 NEW JOBS IN FEBRUARY

U.S. employment data has been mixed ahead of the U.S. non-farm payrolls (NFP) report. A weak Institute for Supply Management (ISM) Employment Index showing a contraction on Thursday is being balanced against a strong ADP Private payrolls report that beat expectations on Wednesday. The ADP Research Institute reported that US private payrolls grew by 214,000 in February beating the forecast of 185,000. Usually there is a low correlation between the ADP and the NFP due Friday, but aside from the employment change disappointment in January they have consistently beaten expectations in the past four months. The private payrolls report shows manufacturing is still weak with a loss of 9,000 jobs, but the optimism comes from the expansion of the services sector that added 59,000 new jobs.

The USD declined against the EUR after the release of the ISM Employment Index that posted a contraction at 49.7 in February. Overall the U.S. service sector continues to expand albeit at a slower pace, but given the focus on employment data this week investors sold U.S. dollars ahead of what could be a disappointing Non-farm payrolls number. Last month even though the NFP headline number was less than anticipated the fact that wages grew and the unemployment rate was lower was enough to boost the USD.

The NFP will be published by the U.S. Bureau of Labor Statistics on Friday, March 4 at 8:30 am EST. Employment is the strongest pillar of the U.S. economic recovery since the credit crisis and the influence on the Fed's interest rate decision is significant. Economist's forecasts range around 185,000 to 200,000 new jobs added. Anything outside of that range for the biggest forex indicator will set a direction for the USD.