NFP: What to expect?

As usual, every first Friday of the month at 12.30 GMT Non-Farm Payrolls will be published.

After a bad data released in April, many specialists wait for the recovery of the labor market and strong add to the number of new jobs.

The latest data was mixed. ADP Non-Farm Employment published on Wednesday added 177K against predicted 178K, but fell down strongly against 255K in April. On Thursday the number of unemployment claims showed a decrease from 257K to 238K.

With such an unclear situation, the forecast of 194K of new jobs looks pretty difficult to achieve. On the other hand, no doubt that the US economy will show such a weak result as 98K two months in a row. So I expect the growth of employment to, approximately, 160-170K.

Last month the jobless rate showed the best result for a long time – only 4,5%. It will be difficult for the market to uphold such a low meaning, so it’s expected that an unemployment rate will grow to its annualized 4,6% – 4,7%.

As for the average hourly earnings, many economists expect the result near it’s annualized 0.2-0.3% and it seems like the most probable scenario.

Overall: NFP is around 160-170K, the jobless claims – 4,6%, average hourly earnings – near 0,3%.

It is also necessary to point out that this report is very important for the FED as an indicator of possible rate hike in June. Even the result slightly under the expectations will be a good support of this decision.

NFP impact on EUR/USD during the previous release:

How to trade EUR/USD on NFP?

The support level 1.0934 – 1.0943 is a cornerstone for trading the Euro. If the price breaks it down on large volume after the release of the payrolls with a further continuation of the fall or a fixation below it, we should consider short positions.

But given a strong uptrend, a scenario of opening long positions seems like more attractive. Besides it I do not expect very great data, so I prefer to consider a continuation of the growth of EUR/USD.

The best scenario for us will be a test of the support 1.0934 – 1.0943 and a strong rebound of the price. Volume should be concentrated at the bottom on the move. A stop loss should be set below the test or the level of support. A potential of the deal is around 100 pips.

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