Dollar Index: How will the Market React to the NFP on October 7th, 2022?

Chương 12 Dollar Index: How will the Market React to the NFP on October 7th, 2022?

Summary:

The dollar index is getting weaker this week falling from the 114 level, and major currencies and metals are increasing significantly. Gold touched the $1730 level, but will it further increase? On Friday, October 7th NFP will be released at 4:30 PM (GMT + 4), and the whole market is waiting.

1. Fundamentals

In today’s article, we will discuss the effect of the three different options of the Non-Farm Payroll. To start with, it is important to know that the Non-Farm Payroll is expected to decrease to 250k from a previous result of 315k, but is it actually the case?

To start with, the Non-Farm Payroll measures the change in the number of people employed during the previous month, excluding the farming industry. Job creation is the foremost indicator of consumer spending, which accounts for the majority of economic activity. It is one of the leading indicators that investors investigate to make decent profits.

What happens if the NFP came at 250k which is expected?

As a rule of thumb, most of the indicators when it is released exactly as the forecast will not have a very big impact on the market, because the market was already impacted by the forecasted result. However, a 250k data would be bearish for the USD, and metals and major currencies might increase versus the USD.

What happens if the NFP came below the expected level of 250k?

Below the expected level would result in a bearish trend for the USD, and the dollar will lose momentum versus major currencies and metals such as Gold. A lower-than-expected result would come bearish to the USD.

What happens if the consumer confidence index came above the 250k level?

A higher-than-expected result is considered bullish for the USD. If the NFP increased further above 250K, the dollar index will further increase and becomes stronger versus major currencies and metals.

Dollar Index: How will the Market React to the NFP on October 7th, 2022?-1

NFP Chart

Biden’s cabinet is looking to further raise the interest rate to a forecasted level of 4.4% by the end of 2022. The world’s central banks are looking further to tighten their monetary policy to fight inflation.

2. Technical Analysis

Gold H1 Chart

Dollar Index: How will the Market React to the NFP on October 7th, 2022?-2