Private payrolls outshines headline number
International Trading
• Non-Farm Payrolls Release Live Coverage with Valeria Bednarik
• Trade Non-Farm Payrolls LIVE with Wayne McDonell
• Educational Video about the NFP data by Adam Rosen
Assessing the headline number might be tricky as massive hiring and lay offs by the Census Bureau affected the probe in previous months. The ADP report might be something to look at before Friday's outcome. It does not account for public employment and reported a positive 42,000 positive change in job creation.
If the report turns out below estimates most analysts believe the US dollar will react negatively keeping downward trend. In the event that the report should present better-than-expected results, the greenback, analysts believe, would respond favorably. The direct relation stand point, however, is not unanimous, there is an expert who thinks there is a possibility that sub par data might drive investors to the safety of treasuries providing the USD with a boost.
Below are the experts' complete opinions. Ed Ponsi - President Of FXEducator LLC
"The headline number is much less important than the private payrolls number. This is because the headline number was previously skewed due to massive temporary government hiring, and now by massive layoffs. I expect the overall number to show a loss of about 50,000 jobs, but the private sector should show an increase of about 75,000 jobs."
If the report is much worse than anticipated, you could see US Dollar strength because of money flowing into the safe haven of US Treasuries. A good report could actually be a negative for the USD, because it would push money into riskier assets." Andrei Knight - Sr. Currency Strategist At FxKnight.Com
I'm expecting we'll do a bit better than last month's -125K, but perhaps not quite enough for a positive number. The important thing to listen for, however, remains the sector-by-sector breakdown, and not the headline number. We need gains in areas besides government and healthcare, and permanent jobs rather than temp ones. Otherwise there is no long-term recovery possible. I'm not as optimistic about the unemployment percentage, however - we may well hold steady or even slightly worsen there.Valeria Bednarik - Chief Analyst A FXstreet.Com Independent Analyst Team
"Finally we are again approaching to the most important event of the month, the US monthly employment change numbers in the form of the Non Farm Payrolls; after printing 3 positive months from March to May this year, and losing jobs steadily since April 2007, the American economy is expecting again a reduction in the number of jobs; a loss of any number around 100K or higher should add to current dollar weakness and fears of a double dip in the US; unemployment rate was a positive surprise the previous month, falling from 9.7% to 9.5%. If the rate rises again, more weakness will be seen in the greenback.
However, this is one of the few reports that can change the trend: A shockingly positive data, with the economy generating and not losing jobs, and unemployment rate under 9.5%, could erase market fears, and save dollar from its current gloomy outlook. Chances are low, but not impossible."Adam Narczewski - Financial Analyst At X-Trade Brokers, XTB
“Recently, we are targeted with mixed news from the U.S economy. From one side, macroeconomic reports show that the industry is not bouncing back as quickly as optimists expected, on the other hand, U.S companies are presenting better than expected quarterly reports. The worrisome signs come from the economy itself where regional economic activity indices (NY or Philly) declined by more than anticipated. The labor market is under pressure as not many jobs in the private sector are being added. The Fed is planning to intervene again (buying back Treasuries on the open market) which shows that for an economic boost we have to wait. I expect NFP to decrease by 75K (-75K) in July. Worse than expected news might end the upward corrective movement on the EUR/USD, which might drop below the $1.30 level (unless it breaks $1.32 before Friday)."Sinan Saleh, Analyst At EcPulse.Com
"NFP -55K to -45K
Based on the recent weakness in the United States economy, we expect to see more jobs lost in July since employers are still reluctant to add new workers; while unemployment will remain unchanged at 9.5 percent."
Jeremy Cook - Chief Economist & Corporate Foreign Exchange At World First UK Ltd
"My prediction is a figure of -75k
While there is some job creation occurring stateside the unemployment picture in the US is likely to stay ugly for at least the next 12 months. This will likely keep domestic consumer demand at depressed levels and weigh on both the US and global recoveries."Dracon Partners
"The employment data that will be released this Friday will be the pulse of this quarter’s economic recovery. According to the market consensus, it is expected that the initial jobless claims figures that will be released on August 5th will set around 455.000 benefit requirement, against the 457.000 of the last week.
The Non-Farm Payroll exchange will decrease 63.000 against the 125.000 drop registered last month.The private sector payroll exchange will be around +10.000 against 9.000 released last month.
Finally, here at Dracon Partners EAFI, our estimate of the unemployment rate is 9,5% even if according to the market consensus it will increase a tenth reaching 9,6%."Tiffany Hammond - Founder Of TrifFX
"-20K to 20K
For the first time in 3 months the Manufacturing reports haven't all been in agreement with declining numbers; 1/2 of the indicators I watch actually show signs of growth. There has also been an increase in both ADP and Non-Manufacturing numbers. In spite of the last wave of Census job losses to hit this month (-150K) it seems there may be room for a surprise to the upside for U.S. Jobs."Yohay Elam - Analyst At Forex Crunch
“My estimation is for a small loss of 20,00 jobs, due to public sector layoffs. ADP Non-Farm Payrolls, and especially the ISM figures show that situation isn't that bad. As the government still has an impact on the headline figure, the focus will be on the private sector figure. A gain in the private sector will be dollar positive, while a loss in the private sector will hurt the greenback.” Ilian Yotov - FX Strategist And Founder At AllThingsForex
“The U.S. Non-Farm Payrolls and Employment Situation report could provide further evidence that slow jobs creation and high unemployment could continue to restrain the Fed from raising rates and possibly even force the central bank into offering additional monetary policy stimulus. The U.S. economy is expected to lose 63K to 75K jobs.” Anna Coulling - Owner Trader At Master The Markets
"Should tomorrow's NFP data mirror that of Wednesday's ADP figure (which came in better than expected along with the ISM & which resulted in the usd index trading back above the 200 day moving average), then we should see a similar bounce in the US dollar tomorrow. The 200 day moving average is now the key technical indicator for the longer term trend for the US dollar and despite this small rebound the index remains heavily bearish. A failure to hold at the 200 day ma would see an initial test at 79.507 followed by a possible re-test of the 2009 low at 74.17. As always traders should beware the immediate market reaction to the release which is generally in the opposite direction to the final intra day move later in the day."
