By Greg Holden – Another new month brings with it a fresh Non-Farm Employment Change report from the US government. No doubt many investors have been watching the riots unfold in Greece, bailout packages getting solidified and a shocking plummet in the value of the EUR and Crude Oil. The USD has surged to 1-year highs against a number of currencies, the EUR primary among them. This makes tomorrow’s Non-Farm Payroll (NFP) report even more significant.
The American economy appears to be a short-term safe-haven for investors who feel uncertain about the Euro-Zone. As a result, any positive news coming out of the US may help to facilitate this perception and add strength to the Dollar. This is precisely what we’re expecting tomorrow with the NFP report.
Expectations are for a growth, in the non-farm sector of the American economy, of 197K jobs. A forecast which may indeed be accurate, even underestimated, given current conditions. Last month we saw a growth in NFP by 162K jobs, and most data we have says that employment has only improved since then. Temporary hiring and long-term employment are both up. Jobless claims and layoffs are both down. Wednesday’s ADP report was better than expected. Safe-haven status of the USD and falling oil prices guarantee stronger buying power of American firms, thus further growth. And lastly, the unemployment rate has held steady in the face of systemic layoffs around the globe.
As stated before, any positive data from the US should lead to a strengthening of the safe-haven status of the USD. If the NFP report comes inline with forecasts, give or take a few thousand jobs, the USD will likely continue to mount record gains against its rivals going into next week. It appears as if tomorrow’s data can only help the Dollar, even if worse than forecast results are given.
Forex Market Analysis provided by Forex Yard.
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