NFP is rapidly approaching. The US economy is expected to add 212,000 new jobs as of 13:30 BST on Friday 5 April, according to The Economist.
The 212,000 forecast is similar to last month’s forecast of 198,000. In fact, starting in November 2022, the expected outcome is around 200,000 or even lower. However, there were also extreme results like 336,000 in October 2023 and 356,000 in January.
Many of these measurements were later revised downward. But there’s no doubt that it lowered the probability of a Fed rate cut at the time, and has pushed the dollar higher recently.
Markets expected about six rate cuts at the beginning of the year, but are now satisfied with the Fed cutting rates three times. But most recent US data has been better than expected, making even three rate cuts no longer a certainty. Last Monday, the ISM Manufacturing Business Index turned positive for the first time since October 2022. So, given that economists continue to misjudge the strength of the U.S. economy, what could happen if NFP again beats expectations?
If NFP is better than expected, we will focus on GBP/USD. If the NFP reading is weak, I will keep an eye on his ETHUSD.
GBP/USD has been stuck in a rectangular pattern for 127 days at the time of writing, with the difference between the low and high of the pattern being almost 300 pips. This could push the price up to 1.2228 once it breaks through the lower bound at 1.2519. Failure to break through the lower end of the range will result in more sideways trading.
GBP/USD daily chart
If NFP is slightly weaker than expected, or in line with expectations, Ethereum could be a big winner, unless NFP is near 50,000, suggesting a recession.
ETHUSD is trending bullish and heading towards the Bitcoin halving on April 19th, when the price is expected to rise. The price is trapped in a triangular pattern, with support near the March lows at $3,052. If the price turns upward just above this level and breaks out of the downtrend line shown in the chart below, ETH could reach a new high of $4,252 in 2024. However, if NFP is too strong and the likelihood of a Fed rate cut is further reduced, ETH prices could fall through the March lows.
ETH/USD daily chart
How will you trade NFP this Friday? Log in to your ThinkPortal and prepare to trade.
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