Forex Minute Trade Plan – Fundamental Insights 02/05/2014

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Forex Minute Trade Plan - Fundamental Insights 02/05/2014

 

Here’s a look at the day’s key fundamental releases, and their likely impact on the global currency markets.

US Nonfarm Payrolls

As with yesterday’s trade plan, the major releases come out of the US on Friday. Undoubtedly the day’s headliner, the latest nonfarm payrolls data is set for release as the markets open in the US. The figure is probably the most hotly anticipated data release on the calendar. The figure is a numerical representation of the change in the number of people employed during the previous month. A rise in the number of people employed translates to an increase in disposable income, consumer spending, production, and finally, output. Conversely, a decline, or slowing, of employment growth, would suggest a future decline in output. For these reasons, a higher than expected figure will generally translate to strength in the USD, while a lower than expected release will generally translate to greenback weakness. Consensus forecasts growth of 210K versus a previous release of 192K, so keep this figure (and its application to the previously outlined scenarios) in mind as the data is released.

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US Unemployment Rate

The day’s second headliner also purports to the employment situation in the US – the unemployment rate. The figure is a percentage representation of the overall number of individuals unemployed in the US. Consensus forecasts the release at 6.6%, a small decline on the previous release of 6.7%, which missed expectations of 6.6%.

Policymakers in the US are will be watching the unemployment situation in the US very carefully, as headline data like this will factor strongly into their medium term interest rate policy. With this in mind, look for a higher than expected release to weaken the US dollar versus its major counterparts, while a lower than expected figure will likely strengthen  the greenback.

To contact the reporter of this story: Samuel Rae at Samuel@forexminute.com