This Month’s NFP Report Expected to Be Much Better than Last Month’s, But Is This Good News?

On Friday, June 5th the Non-Farm Payroll (NFP) will be released and the US economy is expected to shed another 10 million jobs. This would be half of April’s 20 million, but still an incredibly high number.NFP reports since the COVID-19 lockdown have reported unprecedented numbers of unemployment which reflect negatively on the United States economy.

Expectations for this Friday’s NFP

As mentioned above, expectations are for the report to show 10 million new unemployment claims, which would increase the overall unemployment rate to 20%. This is still below the 25% average that the country saw during the Great Depression a century ago. We should also take into consideration the fact that the unemployment average jumped from 3.5% to 20% in less than three months.

 

Wages that jumped to 4.7% in April are set to revert to normal. Economists expect the month-on-month increase in wages to fall to 0.7%, down from 4.7% in April.

 

How are Markets Expected to React to the NFP?

Historically the NFP has had different effects on the market! Last month, despite an unprecedented number of 20 million unemployment claims, volatility did not shoot through the roof, and assets like the EURUSD and the SP500 Index remained relatively stable. That’s mainly because the numbers had already been priced in. 

 

What creates volatility and excitement around the NFP is when the numbers significantly deviate from expectations and shock the market. If this month’s NFP comes close to the numbers we mentioned, assets are expected to be stable, however, just like everything else in the markets, nothing is guaranteed and a surprise could move the markets and create great trading opportunities.

 

Get Ready to Trade the NFP this Friday at 4:30PM GST

Set your alarm and get your trading account ready for Friday, June 5th at 4:30 PM GST (1:30 PM WAT) and be prepared for the opportunities that come along with the NFP report.

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