Nonfarm Payrolls Preview: Three reasons for a downside surprise, triggering dollar buy opportunity by forexcrunch NFP forex trading
Economists expect an increase ofpositions in March, down from the impressive 678,000 recorded in February, but similar to 481,000 in January. Such substantial job gains are well beyond the pre-pandemic levels of roughly 200,000 and reflect a reopening recovery.After such outstanding increases, it makes sense to expect a deceleration, but has the consensus dropped far enough? There are additional reasons to expect a slowdown. Statistically, an increase beyond expectations would be rare.
In addition, higher costs, as a result of inflationary pressures seen prior to the war – and somewhat exacerbating them – may have also contributed to some hesitance. Has it likely been a wide phenomenon? Probably not, but enough to trigger a downside surprise. This jobs report is released on April 1 – the earliest possible date, and that implies there are few leading indicators coming ahead of it.
if the theory above is correct. Investors react first and think later. That initial drop and second thought may provide a buying opportunity on the greenback.Assuming the NFP is just disappointing – an increase of fewer than 400,000 jobs, but still a healthy figure – it would keep the Federal Reserve on course to raise interest rates by 50 bps in May.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
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