NFP report preview

Today April NFP report is to be published at 12:30 GMT from the US.

What is NFP report?

• NFP or non-farm payroll report is the monthly statistics on labor condition in the US released by US department of labor statistics. The report comprises goods, construction, and manufacturing sector companies.
• This report influences the financial markets deeply across asset class.

Key highlights –

• The headline number for total hires last month was 98,000. April ADP employment number declined after two consecutive months of rocketing to 177,000 slightly lower than market expectation of 180,000.

• Today payrolls are expected at 190,000.

• The second most vital component is wage growth which as of now is showing health growth of 2.7 percent. Similar expectation today.

• Labor force participation rate is showing no signs of rebound. It was at 63%, in last report.

• Unemployment rate is expected to increase by 0.1 percent to 4.6 percent.

• Average weekly hours were previous 34.3; No major change is expected.

Impact –

• The immediate impact is usually very volatile and today could be more as the market is already volatile due to the coming French election over the weekend.

• A strong report especially the headline number and wage growth could lead to a recovery in the dollar which is weak despite a hawkish toned statement from the Fed. However, French election positioning could keep a lid on the dollar.

• Dollar selloffs would accelerate on a materially weak report of headline below 150,000.

• Instruments to watch – Euro (major resistance at 1.10), gold (broken but hovering close to key support at $1230), yen (waiting to break the resistance at 113), Aussie (hovering close to key support of 0.74), Kiwi (trading close to key support of 0.69) and treasuries (short end could gain grounds on stronger report).