On February 1st, at 1:30pm, close to the opening of the New York trading session, two high impact news releases relating to the USA economy, will be published. The first release concerns the latest January unemployment rate for the U.S. The current rate is 3.9%, close to the 40 year lows, that were repeatedly printed during 2019. The Reuters news agency are predicting no change, when the latest figure is released by the U.S. stats. agency the BLS (Bureau of Labor Statistics).
The unemployment rate release is traditionally accompanied by other key unemployment and employment metrics, such as; the participation rate and the underemployment rate, both of which are forecast by Reuters to remain unchanged. In December, the participation rate was 63.1% with the under unemployment rate coming in at 7.6%. Weekly wage inflation is forecast to remain unchanged at 3.2% year on year, with average hours worked predicted to show no change at 34.5.
The other high impact release which traders should be mindful of, concerns the NFP numbers released by the BLS. The key metric (jobs created in a specific month) is often regarded as the primary method to judge the health of the USA jobs market, therefore, it’s used as a leading indicator of the overall health of the USA economy overall. The leading NFP number is printed monthly in arrears, on the first available Friday, after the preceding month.
The first NFP print of the year can often be volatile and come in significantly lower than the smoothed, yearly average. During the preceding month of December and the last quarter of the year, the U.S. economy might have employed many part time, seasonal jobs, which then end early in the new year.
The Reuters prediction is for an NFP print of 165K for January, a substantial fall from the revised 301K jobs added to the economy in December 2018. Whilst on first inspection such a fall in jobs created in January (if the forecast is met), appears to represent a dramatic fall, as previously referenced, seasonal factors must be taken into consideration.
Historically, the employment and unemployment data for the USA can move FX markets, there have been times when the NFP number has provided a shock reading, causing sharp spikes in the value of USD versus its peers. Therefore, FX traders who trade USD currency pairs, or traders who trade USA equity indices, should diarise the event and or set an alarm, to ensure they remain vigilant as the wide range of data is released.
