NFP: What to expect?

Non-Farm Payrolls for May 2017 are crucial for the June rate hike. If FED’s decision is really dependent on the data, then it is the most important point.  So if NFP is good, it will be a great signal for FED to raise rates.

If we talk about predictions, the headline number is the Average Hourly Earning or just Wages. It has a big impact on the core inflation: the larger wages are, the bigger inflation is. Now core inflation is going in the wrong direction and the growth of wages can turn it back in right path. It is what FED expects.

If it exceeds the forecast and is higher than 2,5 – 2,8%, it will be a positive sign for rate hike and, of course, will strengthen the US dollar.

As for number of jobs, 181K seems like a reachable mark. Moreover ADP Non-Farm Employment Change showed a strong increase from 174K last month to 253K in this one.

It is expected that the unemployment rate numbers will not be differ too much and will be around 4,4 – 4,5%, which does not cause huge influence on the Greenback.

EUR/USD Forecast

The euro is trading in the consolidation, so the strong impulse and exit from the range will be a great signal for entering the market today.

The cornerstone of trading is the resistance 1.1231 – 1.1243 and we need to notice 2 possible scenarios of trading from it:

1. The strong breakout of it and a fixation of the price (it’s a must condition) above this level. In such case we can open long positions with a stop loss set below the breakout volume bar or the beginning of the sharp growth. A potential of the deal is around 80-90 pips.
2. On the other hand, there are a lot of rumors about possible strengthening of US dollar and if data confirms it, we can consider opening short positions. If the price makes the fake breakout of the level 1.1231 – 1.1243 and immediately returns back and start falling, it will be a good moment to open sales. A stop loss should be placed above the fake breakout. A potential of the fall is around 100 pips.

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