A 230K rise in U.S. Non-Farm Payrolls (NFP) accompanied by faster wage
growth may heighten the appeal of the greenback and spur a short-term
selloff in EUR/USD as it boosts expectations of seeing the Federal Open
Market Committee (FOMC) normalize monetary policy in mid-2015.
What’s Expected:
Why Is This Event Important:
Indeed, a further improvement in labor dynamics may put increased
pressure on the Fed to raise the benchmark interest rate
sooner-rather-than-later, but the subdued outlook for inflation may
prompt the central bank to further delay its normalization cycle as
price/wage growth remains weak.
However, the rise in planned job-cuts paired with the slowdown in
private-sector consumption may generate a weaker-than-expected NFP
print, and a dismal employment report may generate a larger correction
in EUR/USD as it drags on interest rate expectations.
How To Trade This Event Risk
Bullish USD Trade: Job/Wage Growth Exceeds Market Expectations
- Need red, five-minute candle following the release to consider a short trade on EUR/USD
- If market reaction favors a long dollar position, sell EUR/USD with two separate position
- Set stop at the near-by swing high/reasonable distance from entry; look for at least 1:1 risk-to-reward
- Move stop to entry on remaining position once initial target is hit; set reasonable limit
- Need green, five-minute candle to favor a long EUR/USD trade
- Implement same setup as the bullish dollar trade, just in the opposite direction
EUR/USD Daily
- Long-term outlook for EUR/USD remains bearish as the RSI retains the downward trend carried over from back in October 2013.
- Interim Resistance: 1.1600 pivot to 1.6110 (61.8% expansion)
- Interim Support: 1.1300 (161.8% expansion) to 1.1310 (100% expansion)
| Period | Data Released | Estimate | Actual | Pips Change (1 Hour post event ) | Pips Change (End of Day post event) |
|---|---|---|---|---|---|
| DEC 2014 | 01/09/2015 13:30 GMT | 240K | 252K | -35 | +25 |
EURUSD M5: 46 pips price movement by USD - Non-Farm Employment Change news event :
U.S. Non-Farm Payrolls (NFPs) beat market forecasts as the economy added
252K jobs in December following an upwardly revised 353K expansion the
month prior. At the same time, the unemployment rate narrowed
more-than-expected to an annualized 5.6% to mark the lowest reading
since August 2008. However, Average Hourly Earnings unexpectedly slowed
to 1.7% during the same period amid forecasts for a 2.2% print, and the
weakening outlook for inflation may push the Fed to further delay its
normalization cycle as it struggles to achieve the 2% target for price
growth. Nevertheless, the initial bullish reaction in the greenback was
short-lived as EUR/USD worked its way back above the 1.1800 handle, with
the pair ending the day at 1.1839.
