NFP In Focus

The big data focus today is the April NFP release in the US. Following the prior month’s bumper 916k reading, the market is looking for a further increase over April to 990k. The rising optimism around ongoing vaccination success and the gradual reopening underway is supporting the view that the economy will have added extra jobs last month. In line with the upside surprise seen over the prior month, it seems that risks are skewed to the upside for USD with the unemployment rate also forecast to have fallen lower to 5.8% from 6% prior. If today’s labour market report comes in above expectations, USD is likely to reversed recent losses and trade higher. On the other hand if the report undershoots expectations, this will likely see the current USD decline continue across the next week.

Where to Trade the NFP?

US10Y

Treasury yields have come off recently, following the highs printed in March. For now, price continues to correct lower within a bull flag formation and is hovering around the 1.584 region. If data surprises to the upside today, there is room for the market to advance higher targeting a break of the channel top and a move back above the 1.685 level. To the downside, a drop lower on the back of today’s data will target the 1.424 level support next.

Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.

High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% and 65% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.