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NFP

NFP, Jobs Report Headline Friday’s Trade

Posted Thursday, October 31, 2019 by
Shain Vernier • 2 min read

The final trading day of October is entering the late-U.S. session, capping an active month on the forex. Over the past 31 days, global currencies have weathered the Brexit storm and several dovish central bank policy moves. November appears to be another big month for active traders ― it kicks off tomorrow with the U.S. Non-Farm Payrolls (NFP) report (Oct).

During today’s Wall Street pre-market hours, three secondary employment metrics were released to the public. If these figures are any indication, Friday’s NFP disclosure may paint an exceedingly negative picture:

Event                                                             Actual      Projected      Previous

Challenger Job Cuts (Oct.)                          50.275K         NA              41.557K

Continuing Jobless Claims (Oct. 18)         1.690M       1.680M         1.683M

Initial Jobless Claims (Oct. 25)                    218K               215K            213K

The key takeaway from this group of metrics is that each suggests growing unemployment. Job cuts and jobless claims are both up; it stands to reason that Friday’s NFP stats are likely to come in weaker than expected.

In the aggregate, the U.S. Unemployment Rate is near historic lows at 3.5% and is expected to grow to 3.6% for October. However, 4.0% is the key level to keep an eye on for U.S. Unemployment. As long as the number remains beneath 4.0%, the American labor market will be classified as strong.

EUR/USD Tests 1.1150 Ahead Of NFP 

Wednesday was a big session for EUR/USD bulls. A ¼ point FED rate cut drew bidders to the market in mass, sending rates above 1.1170. At this point, it looks like the rate cut buzz has worn off.

EUR/USD, Daily Chart
EUR/USD, Daily Chart

Here are the key levels to watch for the EUR/USD ahead of Friday’s NFP report:

  • Resistance(1): Spike High, 1.1171
  • Support(1): Daily SMA, 1.1108
  • Support(2): 38% Current Wave, 1.1105

Bottom Line: If today’s bearish action persists in the EUR/USD, I will be looking to buy in from downside support just above the 1.1100 handle. As long as today’s high of 1.1175 holds, buy orders will be queued up from 1.1112. With an initial stop loss at 1.1074, this trade produces 38 pips on a standard 1:1 risk vs reward management plan.

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