NFP report preview – all about wage growth

Today NFP report is to be published at 12:30 GMT from 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 -

• Headline number for total hires last month was 173,000. September ADP employment number was better than expected and robust enough at 200,000, higher than 186,000 in August.
  
  
• Today payrolls are expected at 203,000.
  
  
• Second most vital component is wage growth, which is lagging, in spite of solid job gains for the past two years. Last report showed wage growth of 2.2%. Today it is expected to grow to 2.4%.
  
  
• Labor force participation rate is showing no signs of rebound. It was at 62.6%, in last report. It has actually weakened over the past year.
  
  
• Unemployment rate is expected to remain at 5.1%.
  
  
• Underemployment should improve from current 10.3%

Impact -

• Volatility is sure to be on the card, post release.
  
  
• Any number above 200,000 would be considered as very good and expectations for FED rate hike should move up.
  
  
• However any number below 170,000 might not only be bad for dollar, it might spark risk aversion in the market as confusion over FED's stance would become further unclear.
  
  
• On the other hand, better job data might spark rally in equities as it would push back growth fear from the market.

Focus will be on wage growth - better headline number with diminished wage growth will not be considered good by market.

FXCM US Dollar index is currently trading at 12075, resistance lies at 12100 while support is at 12000.