Today is an important day with the NFP. While there obviously is an expectation for a specific number (164K this month), it is important also if the unemployment rate also drops to 4.9% as is expected. This is the last NFP before the FED will decide whether or not to raise the interest rate later this month, so a good number is likely to make the case for a further hike stronger. Weak data could cause some officials to be more cautious and as a result opt to wait a little bit more.
One factor that has to be taken into consideration is that together with the NFP there is a lot of other data released as well, the participation rate and wage growth (average hourly earnings). Another point to look out for are revisions of last month’s number. Sometimes there can be quite a large revision of the data of the previous month, which in turn can have a considerable effect as well, usually as a bit of a belated reaction as the main focus naturally is on the new number.
The trading pattern we usually see a large move, then a small retracement, and then a continuation of the initial move.