Looking Towards The NFP With Uncertainty

The US Shutdown has officially ended – temporarily at least. The Trump administration agreed last Friday to re-open the federal government for three weeks while negotiations for the infamous wall continued.

This shutdown has been the longest in US history starting on December 22nd and lasting until January 25th – leaving even the White Houses chef’s and kitchen staff unpaid. Luckily for the markets (and traders) the US Bureau of Labor Statistics remained funded, avoiding any delays in today’s release of NFP.

Some analysists are expecting this months NFP announcement (released at 1.30 GMT) to reveal the historically long shutdown’s fallout. Others are expecting the NFP to surprise markets. As seen in easyMarkets Inside Viewer – traders seem uncertain; with 54% Selling EUR/USD and 46% Buying.

Yet other groups are not expecting any surprises as the labor market remains robust – even though job addition forecasts are significantly constricted from the previous 312K and wage growth is expected to pull back from the previous 0.4%. Overall though wage growth still remains at a decade high.

Even when December job additions greatly surpassed the consensus of 179K (reported at 312K) markets reacted cautiously. This was likely a result of general uncertainty including fear of global economic slowdown, the ongoing and unresolved US-China trade tensions and an increasingly dovish Fed.

 Adding to this fear is likely the fact that new residential homes sales were down for December, and the ISM manufacturing report dropped 5.2% from November’s 59.3%. Further indicating sluggish economic growth.

Source: instituteforsupplymanagement

On the other side of this fear though is optimism: PMI was reported at a two-month high (54.9%) and ADP report (released January 30th) surpassed the 180K consensus jumping to 213K.

So, the only thing that’s certain is that uncertainty seems to be the order of the day.

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