Daily Outlook: No trading idea today as it is Friday and the NFP is due out. Big money stayed out of the markets yesterday in anticipation of the NFP today and left us with some pretty boring price action.
Non-farm payrolls (NFP) are the most closely watched indicator of US employment situation, as it is the most comprehensive gauge of job creation (excluding the farming sector). Last month there was a -131k drop in the NFP and analysts expect -105k this month. Fundamentals 101 would tell us that a report better than -105k indicates an improving US economy, which would strengthen the USD in anticipation of future rate hikes. Recently however the themes of risk have been a much better gauge of how the markets will receive news. In these risk averse times we generally see the opposite happen of what you'd think for basic fundamentals: bad US news drives the USD up as traders seek the relative safety of the US dollar compared to what the judge to be riskier economies (and being the reserve currency doesn't hurt either). Tagging along with NFP report is the unemployment rate which is expected to increased slightly this month.
Does that mean for sure that the E$ will go up if the NFP is good? Of course not. For all we know big money priced in an NFP drop earlier two weeks ago :).
Have a safe Friday and a good early weekend (or good luck trading to those who feel the need). Happy pipping!