Volatility Alert: This week’s NFP release is believed to be SPECIAL but Why?

Upcoming Non-Farm Payroll

The US Non-Farm Payrolls will be released this Friday at 13.30 GMT (15.30 on your MT4 Platform). There may be periods of extreme volatility shortly before and after the release.

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What’s spesial about this month’s NFP?

April’s NFP consensus expectations was for a 194.000 increase in employment change. EURUSD reacted in a positive manner, giving the opportunity to market participants to take advantage of a +40 pips move (see chart below).

The actual report showed an increase of 211.000 jobs compared to the slow growth of 98.000 positions that were added in the previous reporting month of March, whilst unemployment rate continued to slide.

A solid employment report with nothing signalling a diversion of the Federal Reserve Bank from its transitory bet.

Does US economic stability mean we should expect more bulls in the upcoming NFP? No, not necessarily. This alone cannot constitute a good reason.

THE TOP 5 FACTORS THAT INVESTORS MAY WANT TO CONSIDER FOR MAY’S NFP

An Unemployment Rate number lower than the expected does not necessarily mean the markets will react positively, however they will definitely be highly volatile.
A lower figure on the Unemployment Rate will be a new record low since May 2007, signifying a boost in the US Dollar may occur.
The Employment-Population ratio and positive GDP are an indication of how good the economic health of the US has been which could have a positive impact to the USD.
May has been the best month since 1990, a month in which markets have been reacting positively for the US Dollar over the past 17 years, adding an average of 177.700 jobs per May.
Statistics show that there is a correlation between the Dollar Index and NFP % change, signalling that the recent Dollar Index decline may have a positive impact on NFP.

Remember that sharp spikes occur across many currency pairs, with a lower impact than the spikes on EURUSD due to weaker volatility.

For example opportunities may arise on USDJPY, USDCHF, Gold etc., depending always on your risk appetite.

In addition, the price normally retraces back to normal levels by the end of the day, so, investors may look to take advantage of the market once the market starts settling down.