Thursday, April 2, 2015

US jobs are in focus today | … but signals are mixed in a quiet, thin market

Today is Non-farm payrolls day in the US. This report is one that the Forex market can react to in dramatic fashion betimes. The Federal Reserve is very concerned about employment and will use the data thereon to decide whether or not to start raising core interest rates sooner rather than later. Today is also Good Friday, the start of the Easter holiday period and a day on which many of the larger institutional traders will be away from their desks. This could result in thin, choppy trading conditions, which have the potential to exacerbate the normally expected short-term volatility around the NFP release.

Meanwhile, yesterday the EURUSD pair behaved very well, better than might have been expected, rising from the 1.08 support level to hit 1.09, a full cent rise on the day.

… but signals are mixed in a quiet, thin market

In fact, the leading indicator signals regarding employment are somewhat mixed. The private firm, ADP, which attempts to pre-empt the NFP outcome, showed a disappointing number, only registering 189k of additional jobs for March. Anything under 200k is regarded as below par. On the other hand, the Initial Jobless Claims report, which counts the number of new people applying for unemployment assistance, dropped by 20,000. When this report was released, EURUSD  initially went in the direction one would have expected given the better than expected result. However, ten minutes later (see chart above), the pair started to rise in a determined fashion and did not stop until the Euro had gained, as mentioned, a full cent on the US dollar by the time of the close of trading.

There is a palpable feeling out there that the holiday period started early. That could be one factor in the apparent resilience of the Single Currency.

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