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U.S. Non-Farm Payrolls [NFP] release Friday 1st June 2018

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Barry Dumas
Non-Farm-Payrolls-April-2018

US Non-Farm Payroll Release

Yes, folks it is that time again for the monthly US Non-Farm Payroll (NFP) numbers to be released. The US Non-Farm Payroll number for the month of May will be released locally on Friday the 1st of June at 14:30.

Whether you are a beginner trader or an experienced trader, you are going to want to read this blog leading up to and before the NFP announcement!

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What happened previously?

The Non-Farm Payrolls number came out lower than expected at 164K Non-Farm jobs over the 191K Non-Farm jobs expected.

The Average hourly earnings (M/M) decreased to 0.1% and the U.S Unemployment rate also decreased to 3.9% from the 4.0% market forecast.

Looking back at the charts internationally:

Wall Street 30

Screen Shot 2018-05-30 at 10.16.34

Source - Bloomberg

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Dollar Index (DXY)

Screen Shot 2018-05-30 at 10.17.45

Source - Bloomberg

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Looking back at the charts locally:

USD/ZAR

Screen Shot 2018-05-30 at 10.21.27

Source - Bloomberg

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What to look out for before NFP numbers are released:

The U.S. ADP Nonfarm Employment Change is a very good predictor of the NFP report as the ADP Nonfarm Employment Change measures the monthly change in non-farm, private employment. The U.S. ADP Nonfarm Employment Change will be released on Wednesday the 30TH of May around 14:15 South African time and the expected change in private employment is around 189K.

What is forecast this time?

Jobs number:

The number of new Non-Farm jobs are expected to increase to 190K from the previous months 164K Non-Farm jobs.

Take note a higher than expected jobs number should be taken as bullish for the Dollar (USD), while a lower than expected jobs number should be taken as bearish for the Dollar (USD).

Hourly earnings:

The Average hourly earnings (M/M) number is expected to increase to 0.2% from 0.1% in the previous month - This is a key figure to watch and if this number disappoints, it will signal a weak wage inflation outlook in the US.

Take note a higher than expected earnings number should be taken as bullish for the Dollar (USD), while a lower than expected earnings number should be taken as bearish for the Dollar (USD).

U.S. Unemployment Rate

The U.S Unemployment Rate measures the percentage of the total work force that is unemployed and actively seeking employment during the previous month. The U.S. Unemployment Rate is expected to remain unchanged at 3.9%.

Take note a higher than expected rate should be taken as bearish for the Dollar (USD), while a lower than expected reading should be taken as bullish for the Dollar (USD).

What to trade internationally:

Major indices to look at will be the S&P 500, Wall Street 30 and the VIX

Major Forex pairs to look at will be EUR/USD, GBP/USD and USD/JPY

Commodity to look at will be Gold.

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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)

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Education - What is the Non-Farm Payroll?

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 Non-Farm Payrolls report (NFP) is treated as an economic indicator for people employed during the previous month. In the United States consumer spending accounts for the majority of the economic activity and the Non-Farm Payrolls report represents 80% of the U.S workforce.

The reason why farmers are excluded from employment figures is due to the seasonality in farm jobs. 

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

There are a number of 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 digests 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?

1st June 2018 at 2.30pm

May your trading day be profitable!

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