Reviewing US NFP December 2017
Investors are waiting for the nonfarm payrolls report on Friday to get further guidance on employment conditions ahead of the two-day Federal Reserve meeting which will begin on Wednesday, December 13.
The market widely estimates that US interest rates will be raised at the meeting hoping that nonfarm payroll payrolls data will improve so that it will “strengthen expectations of a 25 basis point rate hike”
The US economy has experienced ups and downs this year, political unrest has become a major concern throughout the world, when conditions of inflation remain “mysterious” with a low level throughout the year. However, there is almost no doubt that the US central bank will raise interest rates this month.
US private companies managed to add 190,000 jobs in November, slightly above economists’ expectations, according to a report from ADP employment on Wednesday. Economists estimate that the ADP salary report only showed a gain of 185,000 jobs when the private sector in the US managed to increase by 235,000 in October.
ADP payroll data was released ahead of the US Department of Labor’s non-farm payroll payroll report on Friday as it covered public and private sector employment.
The US economy is expected to get 200,000 jobs in November. After the two data were previously stressed by the natural events of hurricanes and their effects.
The Non-Farm Payrolls report will be released before the Fed makes monetary policy decisions in 2017. If you get significant data surprises it is difficult for the Fed to refrain from raising interest rates.
However, this data is still a top-level data that will shake the dollar and the wage sector will play a key role. Why is the wage sector becoming more important? because of rising concerns about the still low inflation conditions. Higher wages are the key to lifting core inflation. Therefore, salary changes will likely have the biggest impact on the dollar.
Investors are worried that Britain will not be able to meet the EU pre-summit deadline but because talks continue as the European Commission says on Thursday that the next deadline for certainty is on Sunday, Prime Minister May will race against time. Unless the agreement is announced on Friday, we expect sterling to continue its decline even though it is currently rebounding upwards.
The market does not expect much of Germany’s trade and financial surplus and the direction of movement of EUR / USD will be determined exclusively by the market reaction to US employment reports so that there is scope for up or down movements depending on the results of the data release.
NFP Trading Strategy
- It is recommended to wait for the data to be released while still not opening trading positions, even though the latest data releases are in (270K to 130K). Wait for the possibility of revision from the previous month’s data. The market will usually overreact when the actual data is revised with the possibility of actual data being released does not conflict with revised data. At this point, we still have to see the next data release.
- The next step is to wait for the release of the unemployment rate data with estimates still to be at 4.1%. If the release of the unemployment rate is surprising then we must make a decision based on the market sentiment that occurs and looks … Of course, if the unemployment rate reaches below 4.0% then we will see a surge in the USD movement because traders are speculating.
- After all data is released, wait for the price to move clearly and wait for the price to do a retracement before we open a position. Look for the latest support / resistance areas to open positions when high-impact data with various components is very unstable, and be patient to get a chance to open a position.