Today is the day a lot of people have been waiting for, the day of the NFP. While there obviously is an expectation for a specific number (175 this month), it is important to see a number which is around the 200K which is considered an important threshold. Last month the NFP was very bad with only 38K and if we will get a number below the 100K, we should start to get worried.
One factor that has to be taken into consideration is that together with the NFP there is a lot of other data released as well, most notably the unemployment rate, participation rate and wage growth (average hourly earnings). Another point to look out for are revisions of last month’s number. Sometimes there can be quite a large revision of the data of the previous month, which in turn can have a considerable effect as well, usually as a bit of a belated reaction as the main focus naturally is on the new number.
The trading pattern we usually see a large move, then a small retracement, and then a continuation of the initial move.
Currencies
EUR/USD – moved down but was able to find some sort of support around the 1.106 level. We are moving slightly up this morning, but the focus will be undoubtedly be on the NFP this afternoon.
USD/JPY – once again got close to reaching the 100 level, but so far we can see that there is some support to be found. However, we see that we are still headed down and the NFP will be crucial here.
GBP/USD – was unable to stay above the 1.30 level and moved lower again for a change in the course of the day. This was in part helped by the stronger US data which overshadowed the better data in the UK.
Indices
S&P 500 – once again tested the 2100 level but was unable to breach this level as it was also dragged down by the drop in oil prices.
Commodities
Gold – moved down as the data out of the US yesterday showed some positive data which boosted the expectation for the NFP. Another bad set of data and we are likely to mark new highs, and could possible head towards the 1400 level.
Oil – was looking for a direction during the day yesterday, which was clearly given after the inventories. They came in a bit less than expected, but much less than the crude stock of the previous day, which resulted in a big drop of oil prices. This, even though production continued to drop. It was enough to drop below the support at the 45.80 level and even shortly below the 45 level to reach the lowest level in 2 months. We see that we are testing this level from below this morning as well.