The US Nonfarm Payrolls Report of May 02nd 2014…What do you expect ?
The US labor market report is announced on the first Friday of every new month which measures the US employment numbers in the Nonfarm sector. In fact, the US Non Farm Payrolls publication is considered as one of the most important indicators which determine the health of the world’s largest economy. This report is including (industry data on employment, hours, and earnings of employees.
All the investors in the global markets monitor the news cautiously as the NFP’s data has great effects on the US Dollar as well as US equity markets.
It is widely expected that the labor market will add (210,000) jobs higher than the previous reading by 18.000 (192.000 jobs) while the unemployment rate is expected to decline to 6.6 %. less than the previous reading ( 6,7 %)
Accordingly, the expected reaction scenarios will be as follows.
*The Upside/Bullish Scenario
We can see an increase of the employment numbers during the last month as expected (210.000). So if the numbers came as expected or upbeat expectations, we can see a rebound of the U.S. dollar. And this may encourage the Fed to taper further the quantitative easing program by other $10 billions. And it may continue reducing the monthly asset purchases in the next months.
*The Downside/Bearish Scenario
The NFPs can drop below expectations , means below 210,000 jobs , or below the previous reading ( less than 192.000) , it would negatively affect the U.S. dollar , and can push the monetary policy makers to review the Fed monetary policy decisions, and It would represent a negative signal and show that the US economy remains vulnerable.
For this reason, Friday U.S. Nonfarm payrolls report is the major economic event for this week. So, we recommend you to remain cautious in trading during the news releases, as high volatility is expected.
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