Another Dollar Rally?

November 6, 2015 by Michael Oyebamiji

The US economy will be releasing the Monthly jobs data which shows the strength and slack of the labour market. The previous Nonfarm payroll for October (142,000 Exp. 203,000) September (173,000 Exp. 220,000) August (215,000 Exp 223,000) and July (223,000 Exp 230,000) were all bellow expectation. Analysts are a bit optimist about the Nonfarm payroll figures for the month of September as the market will be expecting the US economy to have added 180,000 more jobs.

Non-farm payroll will be a very important data that the FED will be watching closely to give them more insight into the strength if the US economy in other to decide when to Hike interest rate. It would be recalled that the FED chairman in her testimony earlier in the week made it clear that December rate hike is not off the table as they will be watching all economic data from now till December. So this simply means, The FED is all about the economic data, good economic data means we might see a rate hike in the next FOMC.

Other economic data to watch are unemployment rate (5.1%) which has been very strong and it indicates that the US economy is almost at full employment. Average hourly earnings are another key data to watch, we saw a drop in the previous month from 0.4% to 0.0%. Labour participation rate also is also expected at 62.4%.

A strong US data today will mean more excitement for the dollar bulls as the market is expected to rally across the board on the back a strong data, however, a weak data might see a massive sell  of USD and most importantly, commodities like gold which has been the worst performing asset for the week might rally to the upside.

Currencies like USDJPY might drive through 122 on the back of a strong NFP and a weak NFP might push prices back to 120.00. Eurusd might drop to 1.07 if NFP figures come stronger than expected and a rally to 1.10 if we see a disappointing data. Cable might further drop to 1.5000 if dollar gets stronger because of good NFP data and a rally back to 1.52 if we see a weak data.