NFP headline data comes in stronger than expected.

$5.25

25.00 $ earned

500 views

Click to zoom in
TIO markets
TIO markets added a new post
2 years ago

The first Friday of the month can only mean one thing – US NFP data. While bank economists left their estimates largely unchanged after Wednesday’s strong ADP payroll number, I think it’s fair to say most traders were looking for a stronger number. And let us not forget that Canada also had employment data to release. This brief shift to a macroeconomic focus is still very much against a background of the uncertainty of the coronavirus. While FX was mostly content to await the data, equity markets in Asia and Europe were slowly giving back some of Thursday’s gains. The roller-coaster continues and shows little sign of abating any time soon.

OK enough waffle, what were the numbers? For the US, Non-Farm Payrolls for January were +225k v +160k expected although this was tempered by an increase in the unemployment rate from 3.5% to 3.6%. For Canada there was a gain of 35k jobs v 15k expected and the unemployment rate dropped from 5.6% to 5.5%. Now keep in mind the USD had been making some decent gains over the prior 48 hours and as mentioned traders were probably skewed a little towards a stronger number. So the ensuing price action might have been a little more muted than one might have expected after such impressive job gains. Yes, we got the usual 20-point chop around after the number. USDJPY didn’t like life above 110.00 and dropped as low as 109.53 before recovering to 109.80 by the end of the day. EURUSD tried a squeeze higher but the support turned resistance at 1.0980-85 proved tough to break and ended closing at session lows around 1.0943. GBPUSD followed a similar path also closing at session lows at 1.2882. USDCAD was tugged both ways by the data. Initial price action saw a drop from 1.3310 to 1.3278 but by the close we were back to 1.3308. XAU rallied to a high of 1,574 before closing at 1,570. Meanwhile equities seemed to be reacting more to Coronavirus uncertainty than the implications of the data. The DJ would close lower by almost 1% while the S&P and Nasdaq end down just over 0.5%. What conclusion can we draw from this? Well unseasonably warm weather probably gave the jobs number a boost. But, its events in China that traders will focus on in the week ahead and for now, the USD is the safe haven of choice.

As the USD is currently asserting its strength across the majority of major currency pairs, I thought I’d take a quick look at a daily EURUSD chart. We know resistance sits close by at 1.0980-85 and as you can see support now sits at the October 2019 low of 1.0880. I’m sure many of us thought it would continue south from that point back in October, but it wasn’t to be. So this now represents major support. To see where we last traded below that level, you would have to go back to May of 2017. It’s a big level! Keep it on your radar.

Open an account today to trade with a broker you can rely on. https://tio-m.com/signup

  • 1
  • Comment
    2
ADD IMAGE
  • Teejy
    Teejy2 years ago

    Missed NFP but was a good write up

    1
    • TIO markets
      TIO markets2 years ago

      Thanks Teejay! Please be sure to follow us to keep you updated with any updates from us.

      0
Trading currencies and CFDs carries a high level of risk since leverage can work both to your advantage and disadvantage. As a result, CFDs may not be suitable for all investors because you may lose all your invested capital. You should not risk more than you are prepared to lose. Before deciding to trade, you need to ensure that you understand the risks involved taking into account your investment objectives and level of experience. Past performance of CFDs is not a reliable indicator of future results. Most CFDs have no set maturity date. Hence, a CFD position matures on the date you choose to close an existing open position. Seek independent advice, if necessary. The www.tradigdot.com portal, neither in whole nor in part, constitutes a recommendation within the meaning of the provisions of the Ministry of Finance Regulation of October 19, 2005. on information constituting recommendations regarding financial instruments or their issuers (OJ from 2005 No. 206, item 1715). The contents contained on the website do not meet the requirements set for recommendations in the meaning of the above-mentioned Act, eg they do not contain a specific valuation of any instrument, they are not based on any valuation method, nor do they specify investment risk.All strategies and ideas in the portal are opinions of users and are for information and educational purposes only. Historical results from the portal strategy do not guarantee the same results in the future.TradingDot © 2021