US Nonfarm Payrolls (NFP) Preview - NFP date: Friday 04 August 2023, Time: 12:30 UTC
Commentary
On Friday, August 4th, the US non-farm payrolls (NFP) for July will be released.
NFP releases are historically high-impact monthly events for US financial assets, and with many traders and investors out of the market for the August summer holiday, this Friday’s US nonfarm payrolls event is expected to trigger slightly higher market volatility on lower trading volumes.
Key points:
- US nonfarm payrolls for July are expected to follow June’s trend, slowing slightly
- Although the consensus is expecting 200,000 new jobs created during July which is below the 209,000 new jobs created during June, historically, 200,000 new jobs created per month still imply strong US labour market conditions.
- At a 3.6% US unemployment rate, current employment remains near historically low levels
Cross asset price action following the previous US nonfarm payrolls (NFP)
The above chart illustrates the Dowjones 30 CFD, EUR/USD CFD, WTI crude oil CFD and the 10-year US bond CFD price action since after the July 07th US NFP report.
Since the July 07, 2023, US NFP report:
- WTI Crude Oil CFD advanced +16.68%
- Dowjones 30 CFD advanced nearly +3%
- EUR/USD CFD advanced +0.63%
- US 10-year Bond CFD lost -0.87%
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NFP Day Asset Spotlight:
WTI Crude Oil - uptrend intact
Technical commentary: WTI Crude Oil current price $81.85 remains in a multi-week uptrend. This can be technically supported by the higher tops and higher bottoms price sequence (see chart). The clearing above the previous key resistance now turned support at $77.15 seems to have reinforced the view of a resumption of the prevailing multi-week uptrend. Bullish conditions seem to be in play with the prospects for a further price extension towards $85.45 on the table, downside risk below the $77.15 support could expose the lower $64.20s (see chart).
EUR/USD - Bullish conditions remain above the 1.0804 June 15th 2023 low?
Technical commentary:
EUR/USD current price 1.0978 looking for support above the 40 and 50 day moving averages near 1.0975 (see chart). Upside prospects remain over the medium term (26-49 days) provided price can remain above the 1.0970s. Downside risk below the 1.0970s could expose the lower support seen near the June 15th lows at 1.0804.
Dowjones 30 - below the $35,679 52-week highs, a move lower towards $34,925 can not be ruled out.
Technical commentary: Dowjones 30 current price $35,505. The index is consolidating the prevailing multi-month upward advance below the 52-week high near $35,505. Provided price can overcome the 52-week highs, the prospects for a resumption of the prevailing uptrend to continue toward an extension near $36,385 can not be ruled out. Downside risk seen below the $34,925 support (see chart).
Nonfarm payrolls key data to watch:
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| Time/UTC | Country | Indicator | Previous | Forecast |
|---|---|---|---|---|
| 12:30:00 PM | United States | Nonfarm Payrolls (NFP) | 209,000 | 190,000 |
| 12:30:00 PM | United States | Unemployment Rate | 3.6% | 3.6% |
| 12:30:00 PM | United States | Average Hourly Earnings, m/m | 0.4% | 0.3% |
Source Tradingview August 2 2023 10:28 UTC
What could move the US dollar on NFP day?
- Higher job creation above the 190K forecast could strengthen the USD
- Below 190K could weaken the USD
- Higher average hourly earnings could support a stronger USD
Bottom line: Regardless of if the July US NFP data surprises towards the upside or downside, the current US job market remains robust. With the summer trading conditions in effect, higher volatility should be expected with technical trading on the front line.
Happy trading.
Not investment advice. Past performance does not guarantee or predict future performance.
