NFP Friday

February 5, 2016

NFP Friday:
Heading into US Non-Farm Payrolls tonight, the pain for USD longs hasn’t eased. The USD was dumped courtesy of the Fed’s Dudley’s comments which were way more dovish than the market has positioned for. Dudley’s comments hit home with markets and were interpreted that things just got real in terms of the Fed delaying future rate hikes if the domestic and global economies didn’t pick up from their current trajectory.

According to Bloomberg News, economists are expecting Non-Farm Payrolls to rise by 189K, for the Unemployment Rate to remain steady at 5% and the Average Hourly Earnings to increase to 0.3%.

December’s NFP number saw a spike of +292,000 jobs. With a slowdown in jobs expected, the fact that the Average Hourly Earnings number is expected to increase is huge for the Fed who I’m sure will pounce on any piece of good news that it can get its hands on.

This isn’t every technical trader’s cup of tea but if you are interested, I definitely recommend checking out the CME’s FedWatch Tool.

“Based on CME Group 30-Day Fed Fund futures prices, which have long been used to express the market’s views on the likelihood of changes in U.S. monetary policy, the CME Group FedWatch tool allows market participants to view the probability of an upcoming Fed Rate hike.”

The probability that the Fed raises interest rates in March according to the CME Group's FedWatch Tool.

Month Probability
March 8%
April 12%
June 19%
July 21%
September 25%
November 27%
December 34%

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Chart of the Day:
Which of the majors do you see as the best place to take advantage of these USD moves?

GBP/USD Daily:
Forex chart, GBPUSD Daily, 160205
Click on chart to see a larger view.

Cable is an interesting one, with price having pulled back into previous support that is now possibly acting as resistance.

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On the Calendar Friday:
AUD RBA Monetary Policy Statement
AUD Retail Sales m/m

CAD Employment Change
CAD Trade Balance
CAD Unemployment Rate
USD Average Hourly Earnings m/m
USD Non-Farm Employment Change
USD Unemployment Rate

Do you see opportunity trading around NFP on the MT4 platform? Take advantage on your free $50,000 Forex demo account.

Dane Williams – @VantageFX

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