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#1 07-01-2022 10:45:42

Admin & Trader
From: Paris - France
Registered: 21-12-2009
Posts: 3200

USD: Is it safe to buy the dollar ahead of today's NFP report?

USD: Is it safe to buy the dollar ahead of today's NFP report?

The US dollar is trading in tight ranges ahead of today's NFP report. Data released this week shows a mixed picture, and markets await the Fed minutes to be released later in the North American session.

As expected, the first trading week of the year started on a slow note as banks were closed in many developed countries. But things will change as we approach the second half of the trading week, when the non-farm payrolls, or NFP, are released today.

Ahead of the release, momentum is building in the financial markets. During the first three trading days of the week, traders have focused on the clues given by other reports on the US employment situation. So far, a mixed picture has been revealed by the ISM Manufacturing, JOLTS and ADP reports.

Before discussing the three, let's look at the technical picture. As shown below, the dollar index has been in a narrow range since late November as investors await more clues from the Fed. We may learn more about the beginnings of the Fed's plans today, as the minutes of the previous meeting are due in a few hours.

ISM manufacturing disappointed

Released yesterday, the ISM Manufacturing index fell in December by 2.3 points to 58.6. While the index is down, two things point to continued strength. First, the index is well above expansion territory, marked by the 50 level. Second, the employment component is up 0.9 points to 54.2. Therefore, a positive for Friday's NFP report.

JOLTS missed

JOLTS missed expectations. JOLTS is the acronym for the Job Openings and Labor Turnover Survey, and this week's release indicates that job openings fell in November and the number of resignations reached a record high.

ADP exceeded expectations

Encouraging momentum in the labour market came from the ADP or private payrolls report. Released earlier in the day, it showed that private employment gained 806,000 new jobs in December, far more than the market expected.

However, the strength of the labour market in December may not reveal the true impact of the Omicron variant, as it remains to be seen. Therefore, interpreting the NFP report of Friday would be a tricky feat.

"Anything worth having is worth going for - all the way." - J.R. Ewing



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