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U.S. Non-Farm Payrolls (NFP) release – 5 July 2019

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Barry Dumas
US-NON-FARM-PAYROLLS-NFP-TECHNICAL-TRADE-NOTE

Non-Farm Payrolls are usually reported on the first Friday of the month, whereby the number of additional jobs added from the previous month is released. The US Non-Farm Payroll number for the month of June will be released locally on Friday the 5th of July 2019 at 14:30 SAST.

Why is the jobs number important?

The Non-Farm Payrolls report (NFP) is treated as an economic indicator for people employed during the previous month and the number being released will have a direct impact on the markets. In the United States consumer spending accounts for most of the economic activity and the Non-Farm Payrolls report represents 80% of the U.S workforce. Farmers are excluded from the employment figures due to the seasonality in farm jobs.

What happened previously?

  • The Non-Farm Payrolls number disappointed and only gained 75Non-Farm jobs against the 185K Non-Farm jobs expected by forecasters.
  • The Average hourly earnings (M/M)did not beat expectations coming in lower at 2% over the expected 0.3%
  • U.S Unemployment rate came in as expected at 3.6%.

Events leading up to the Jobs report on Friday are:

U.S ADP Non-Farm Employment change

The U.S. ADP Non-farm Employment Change is a very good predictor of the Non-Farm Payrolls report as the ADP Non-Farm Employment Change measures the monthly change in non-farm, private employment.

  • The U.S. ADP Nonfarm Employment Change is released two days ahead of the NFP jobs number. The ADP number was released on Wednesday at 14:15 SAST.

The change in private employment underwhelmed market estimates and came in at 107K from the expected forecast number of 140K for the month of June 2019. All eyes will look to the comprehensive Non-Farm Payrolls report (NFP), especially wage growth numbers.

What is forecast this time?

This time around we might expect Analysts to start focussing on other factors in the Jobs market besides the actual NFP number. The Job participation rate which has been very low will come into focus as U.S economic growth shifted lower in the second quarter. The impact of the U.S-China trade truce which seems to be fading as the U.S shifts its focus to the European Union.

The big question is, will a better than expected Jobs number curb the economic slump moving forward coupled with a dovish outlook from the FED? Only time will tell!

Jobs number:

The number of new Non-Farm jobs are expected to increase to 164K from the previous months disappointing 75K Non-Farm jobs.

Hourly earnings:

The Average hourly earnings (M/M) number is expected to increase to 0.3% from the previous months 0.2% - This is a key figure to watch and if this number disappoints, it will signal a weak wage inflation outlook in the US.

U.S. Unemployment Rate:

The U.S Unemployment Rate measures the percentage of the total workforce that is unemployed and actively seeking employment during the previous month. The U.S. Unemployment Rate is expected to remain unchanged at 3.6% unemployed.

Technical Analysis outlook on U.S Indices for the U.S Non-Farm Payrolls (NFP)

S&P 500

Look at the S&P 500 the market has been pushing higher despite global growth concerns. The trade truce between the U.S and China is certainly helping to a certain extent giving some stability to the major markets.

We might expect the price action of the S&P 500 to gradually move higher if we see growth in the jobs market this Friday with the NFP release. Take note that the Average hourly earnings will be watched closely once more as the wage growth rate has been subdued.

Technical points to look out for on the S&P 500:

  • The technical support level at 2942 will be watched closely as a breach of this level might push prices lower back to the pivot point (purple dotted)
  • The S&P500 is trading above its 50-day Simple Moving Average (SMA) which supports the move higher at present.
  • Take note that the Relative Strength Index (RSI) of the S&P is currently approaching overbought levels.

SPXLM GT247 Bloomberg-3Source - Bloomberg

Nasdaq 100

The Tech sector has been a clear winner throughout 2019 thus far and that is reflected in the price action of the Nasdaq 100. The index is on track to reach all-time highs ones more as the major FAANG stocks push higher as trade tensions ease.

Technical points to look out for on the NASDAQ 100

  • The price action is pushing higher to all time highs and might encounter resistance at the 7858-price level.
  • Price action is well above its 50-day Simple Moving Average (SMA) (white line) which supports the move higher.
  • A price gap is notable on the chart as it might be filled at some point and worth taking note of as we get closer to NFP.

NDXLM GT247 BloombergSource - Bloomberg

Take note that the outlook and levels might change as this outlook is released before NFP and before the current days U.S Market open.

What to trade internationally:

  • Major indices to look at will be the S&P 500, Wall Street 30, Nasdaq 100
  • Major Forex pairs to look at will be EUR/USD, GBP/USD and USD/JPY
  • Commodity to look at will be Gold.

What to trade locally:

  • Index to look at will be the ALSI
  • Forex pair to look at will be the USD/ZAR
  • Rand Hedges (BTI, CFR) and Rand Sensitives (Banks and Insurers)

How to trade the Non-Farm Payroll (NFP) report: The Strategies

There are many ways to trade the Non-Farm Payroll (NFP) report and here are a few strategies traders look at:

  • The Early birds: traders who will take an early position before the jobs number is released in anticipation that the directional movement the event will cause will be in their favour.
  • The Scalpers: as the data is released these traders will scalp and try and capitalize on the volatility that is created by the data, positively or negatively.
  • The calm and calculated: as the market digest the results of the Non-Farm Payroll (NFP) report and after the volatility swings have occurred these traders will take a position on the markets momentum.

When and what time is the US NFP (Non-Farm Payroll) announced in South Africa?

5th of July 2019 at 14.30 SAST.


Disclaimer:

Any opinions, news, research, reports, analyses, prices, or other information contained within this research is provided by Barry Dumas, Market Analyst at GT247 (Pty) Ltd t/a GT247.com (“GT247.com”) as general market commentary, and does not constitute investment advice for the purposes of the Financial Advisory and Intermediary Services Act, 2002. GT247.com does not warrant the correctness, accuracy, timeliness, reliability or completeness of any information which we receive from third party data providers. You must rely solely upon your own judgment in all aspects of your trading decisions and all trades are made at your own risk. GT247.com and any of its employees will not accept any liability for any direct or indirect loss or damage, including without limitation, any loss of profit, which may arise directly or indirectly from use of or reliance on the market commentary. The content contained within is subject to change at any time without notice.

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