It looks to me as if there is a possibility to see the number of private sector jobs fall below expectations in today’s Non Farm Payrolls report. Private sector jobs is the number the street will be most looking at because of the skew created by the firing of census workers.
The most common estimate I’ve seen for privates is for a gain of 40,000, but I believe the number will fall between 10,000 and 15,000. There’s also a possibility of seeing a loss of up to 10,000.
How will forex markets react?
A number above the consensus of 40,000 will have stocks doing well so expect to see the dollar weaken.
A number between 15,000 and 30,000 will likely cause stocks to decline and the dollar to gain as the market turns risk averse. The reason is because it will look like the economy is set to weaken further, but that the Fed will hold off on any additional quantitative easing for the time being.
Anything below 15,000 could have investors thinking that the Fed will be moving closer to cranking up the old printing press. So after the initial shock wears off, it is very possible to see stocks gain and the dollar fall as traders speculate that the Fed will soon begin expanding its balance sheet.
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