How to trade the US NFP with EUR/USD


A lackluster U.S. Non-Farm Payrolls (NFP) report may fuel a larger recovery in EUR/USD should the fresh batch of data drag on interest-rate expectations.

If we get a conflicting release, then well wait and see how the market reacts first.

Buying EUR/USD Scenario

The non-farm payroll (NFP) report is a key economic indicator for the United States. It is intended to represent the total number of paid workers in the U.S. minus farm employees, government.

The concern at hand within the Federal Reserve centers around falling inflation expectations, which can be captured from a few angles. However, this week has given rise to few counter-points that make the NFP print, and specifically, Average Hourly Earnings specifically important. However, beyond the headline number, which has lost its significance on the fear that the jobs being added are not producing the revenue needed to support the hoped-for economic growth is Average Hourly Earnings AHE.

Since , AHE has risen from 1. IN short, commodities are no longer the drag they were on inflation expec t ations thanks in large part to the summer rally in industrial metals and energy like Crude Oil. An increase in AHE could give the Fed the courage they need to begin talking up expecta t ions for a rate hike that would likely scare the emboldened traders that hold a short USD positions.

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Watching wages, USD well positioned to ride higher In the last five releases, the EURUSD moved, on average, 28 pips in the 15 minutes after the data release and 49 pips in the following 4 hours.