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U.S. Non-Farm Payrolls (NFP) release – 6 September 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 August will be released locally on Friday the 6th of September 2019 at 14:30 SAST.

Market Outlook ahead of the U.S. Non-Farm Payrolls (NFP)

The start to the week sees the tit-for-tat trade disputes between the U.S. and China flare up again as the White House slapped tariffs on roughly $110 billion of Chinese imports on Sunday. Stock markets moved lower as investors moved into safe havens like Gold and Cash, which saw the U.S. Dollar (USD) gain momentum along with precious metals.

One phone call changed all the unrest in the markets as China, and the U.S. agreed to start talks again in Washington as soon as October. This is amidst the two nations realizing that a Global recession is inevitable if the disputes carry on.

What is forecast this time for the Non-Farm Payrolls (NFP)?

We might see a surprise in the number tomorrow if the ADP jobs number is anything to go by, but the Manufacturing PMI numbers disappointed this week which might throw a spanner in the works. The Non-Farm Payrolls will be watched closely this time around and how it will impact the FED's decisions on interest rates for the rest of the year.

Jobs number:

  • The number of new Non-Farm jobs is expected to decrease to 158K from the previous month's less than enthusiastic 164K Non-Farm jobs.

Hourly earnings:

  • The Average hourly earnings (M/M) number is expected to remain unchanged at 0.3% from the previous month. This is a crucial figure to watch, and if this number disappoints, it will signal a weak wage inflation outlook in the U.S. Take note that the Average hourly earnings will be watched closely once more as the wage growth rate has been subdued.

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 3.7% unemployed.

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.

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 an excellent 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 Non-farm 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 surprised and came in much higher at 195K from the expected forecast number of 148K for August 2019. All eyes will look to the comprehensive Non-Farm Payrolls report (NFP), especially wage growth numbers.

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

Wall Street 30

The Wall Street 30 has been consolidating over the last month mainly due to the ongoing trade disputes between the U.S. and China. The markets rallied today as news broke that the two nations would meet again to start talks in October which might finally put an end to all this madness.

Technical points to look out for on Wall Street 30:

  • The price action has finally broken through the 26430-resistance level and might just push higher to 27000 again.
  • The Relative Strength Index (RSI) has also indicated that the trend is changing and will be watched closely.
  • The price action has also closed above the 50-day SMA, which supports the move higher.

WS30LM Index GT247 Bloomberg-2Source - 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 momentum of the market.

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

6th of September 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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