The US Department of Labor will release their monthly employment report, Non-Farm Payrolls at 13:30pm (London). The pivotal data is usually released on the first on the first Friday of each month, and is a good barometer of the health of the US economy. The figures vary widely, causing significant volatility at the time of release as traders react to the figures.
The market consensus is for the Fed is to begin tightening in June with economy growing Yellen will begin exiting the ultra-loose monetary policy.
Due to the weather, there is a change to the normal release of the data. A typical release, a select group of journalists are provided with the report 30 minutes prior to the official announcement in a locked room without outside access. This allows the media to provide a meaningful breakdown of the report, with the key headlines selected. However due to weather, this isn’t taking place, the report will be posted on the http://www.bls.gov/ website at 13:30pm London, with some speculation that it could be slightly delayed. (Perhaps a matter of seconds)
What is the consensus for today’s report?
The average expectation for the headline February figure is an increase of 240,000 new jobs compared to January’s 257,000. With the economy rebounding, and jobs being added at over 200,000 per month, wage push inflation is a not too distant concern. On Wednesday the ADP Employment Report showed an increase of 212,000 jobs between January and February.
The unemployment rate is expected to decrease to 5.6% from 5.7%, with only minimal growth in average hourly earnings (+0.25).
How will the markets move?
In the immediate aftermath markets are exceptionally volatile; traders are digest the data and position themselves. The kneejerk reaction can reverse if there is a significant revision to the previous months headline figure.
Any headline release of 230,000 new jobs and above should be seen as a positive for the USD, adding to the sentiment of a Fed rate hike in June. A number for 285,000+ would put a significant bid into USD against the majors.
The key data after the headline will be the average hourly earnings, as this is the data that has regularly been cited by Yellen, and details wage inflation. At a time when the US is attempting to time a rate hike, central banks globally are cutting rates to stimulate growth.
The USD has been bid in recent sessions, with EURUSD trading down to a 11 and half year low now trading 1.10962. Strong employment data could see the pair take a leg lower as the move towards parity continues.