NFP Better Than Expected, However has Little Effect
Joe Perry March 6, 2020 10:08 AM
The Non-Farm Payroll (NFP) data for February was much better than expected, coming in with 273,000 jobs created vs a revised January number to 273,000 (from 225,000) as well. In addition, the unemployment rate declined to 3.5% in February from 3.6% in January. Average hourly earnings were as expected at 0.3% while average weekly hours worked upticked slightly to 34.4.
Although jobs data has been 250,000+ for 3 of the last 4 months, it will most likely mean little to the Fed at the FOMC meeting on March 18th. As long as the jobs market is holding up well, the main focus for the Fed will be containing the economic fallout from the coronavirus. Employment data going forward will be key. What will the employment data look like in Q2? Will airlines have to lay off employees because people are traveling less? Many companies have already halted international travel because of the coronavirus. Can cruise lines survive with less people booking trips? Will postal workers and delivery people need to be laid off because they may have to halt service due to mail and boxes being contaminated? These are all issues that will be watched over the course of the next quarter in the employment data. The Fed is aware that cutting rates will not stop people from getting the coronavirus. However, cutting rates, along with fiscal stimulus, will help service and travel companies survive the downtick in the global economy.
Markets were mostly unchanged on the release of the NFP data. Traders know that employment is not the main issue at the moment. Despite the much better data, the DXY traded within a 15-pip range after the release.
Source: Tradingview, FOREX.com
As my colleague Matt pointed out earlier, the DXY is currently sitting on massive support between 95.75 and 96.00. Stock were nearly unchanged as well. Watch the headlines for coronavirus and Fed updates to help determine direction ahead of the weekend.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.