US March non-farm payroll preview

Today NFP report for the month of March 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 –

• Last month’s report was a strong one with 235,000 gains.

• Change in private payroll has been 227,000 last month. Today expected 170,000.

• Total payrolls are expected at 180,000.

• The most vital component is wage growth, which has been showing some strength. Today it is expected to rise by 0.2 percent on monthly basis and 2.7 percent annually.

• Labor force participation rate still subdued at 63 percent.

• Unemployment rate is expected to remain same at 4.7 percent.

• Underemployment rate is expected to fall further from current 9.2 percent

Impact –

• Volatility is sure to be on the card, post release.
   
• Any number above 250,000 would be considered as very good and investors will further push the odds of a rate hike for 2017. However, the major impact is not likely to be on the dollar but on stock markets, which would rise on risk affinity.

• Any number below 170,000 will make investors scratch their heads, especially as the ADP reported solid gains.

A better report would be better for equities and especially for different sectors. Higher jobs gains in the energy sector likely to be dampening factor for the oil price.

Overall, the jobs report is unlikely to be a mega mover for the dollar as the market is focused on geopolitical risks, especially after US missile strikes in Syria last night. However, weaker jobs report would be a bigger mover for the dollar than a strong one. The dollar index is currently trading at 100.75, up 0.14 percent so far today.