- Leading indicators are mixed, leaving revisions as the wild card.
- President Biden summoned a press conference, potentially lifting expectations.
- With one exception, mean reversion is the preferred trading strategy according to a new study.
An increase of 664,000 jobs is what the economic calendar shows for May's Nonfarm Payrolls – but last-minute adjustments should be noted by those trading the event with currencies.
1) Revisions, not leading indicators
ADP's showed a whopping leap of 978,000 jobs but the ISM Services PMI's employment component tumbled to near stall-speed. These contradictory figures offset each other and leave the headline projections roughly unchanged.
However, a look back at last month could be significant. April's NFP was a bitter disappointment – only 266,000 instead of nearly one million expected. Speculation about the nature of that figure has been rife, with seasonal adjustments being the main culprit. Apart from the headline, the fate of revisions is critical. Without a large upside move, the dollar could fall.
2) What does the White House know?
US President Joe Biden called a last-minute press conference to speak about the jobs report. Republicans have accused his generous stimulus for pushing people away from work and using April's figures as proof. The White House receives the NFP in advance.
Does that mean that Biden is set to take a victory lap and lash back at critics? Perhaps, and maybe he will only come out to say the road to recovery is long, justifying more help. However, the presser announcement caught investors' attention and that could lift expectations.
Expecting a bullish Biden and expectations of substantial revisions mean markets lean toward a higher NFP.
3) Mean-reversion and patience
Many traders are focused on breakouts – buy high and sell higher, sell low and buy even lower. However, a new study by FXStreet's Eren Sengezer shows the moves are wild in the first 15 minutes, almost all currency pairs return to previous levels within an hour. That includes EUR/USD, GBP/USD, and AUD/USD. The only exception is USD/JPY. For those willing to stay longer on Friday, dollar/yen also returns to the line within four hours.
See the full analysis, including the number of pips each pair moves:
US May Nonfarm Payrolls Preview: Analyzing major pairs' reaction to NFP surprises
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
![EUR/USD stays below 1.1100, looks to post weekly losses](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/EURUSD/european-euro-coin-on-top-of-american-dollar-bill-11292130_XtraSmall.jpg)
EUR/USD stays below 1.1100, looks to post weekly losses
EUR/USD continues to trade in a narrow range below 1.1100 and remains on track to end the week in negative territory. Earlier in the day, monthly PCE inflation data from the US came in line with the market expectation, failing to trigger a reaction.
![GBP/USD struggles to find a foothold, trades near 1.3150](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/GBPUSD/iStock-157771037_XtraSmall.jpg)
GBP/USD struggles to find a foothold, trades near 1.3150
GBP/USD stays on the back foot and trades in negative territory at around 1.3150 on Friday. The US Dollar holds its ground following the July PCE inflation data and doesn't allow the pair to stage a rebound heading into the weekend.
![Gold retreats toward $2,500 ahead of the weekend](https://editorial.fxstreet.com/images/Markets/Commodities/Metals/Gold/gold-bars-50657756_XtraSmall.jpg)
Gold retreats toward $2,500 ahead of the weekend
Gold stays under modest bearish pressure and declines toward $2,500 in the American session on Friday. The 10-year US Treasury bond yield edges higher toward 3.9% after US PCE inflation data, causing XAU/USD to stretch lower.
![Week ahead – Investors brace for NFP amid Fed rate cut speculation](https://editorial.fxstreet.com/images/Macroeconomics/EconomicIndicator/Employment/NFP/america-back-to-work-gm178972493-25143312_XtraSmall.jpg)
Week ahead – Investors brace for NFP amid Fed rate cut speculation
Here comes another NFP week, with investors eagerly awaiting the results as they try to discern the size and pace of the Fed’s forthcoming rate cuts. The weaker than expected July numbers triggered market turbulence, instilling fears about a potential recession in the US.
![Easing Eurozone inflation to back an ECB rate cut in September](https://editorial.fxstreet.com/images/Macroeconomics/Countries/Europe/Eurozone_countries/Eurozone/eu-flags-flying-at-the-european-commission-building-brussels-belgium-24759579_XtraSmall.jpg)
Easing Eurozone inflation to back an ECB rate cut in September Premium
Eurostat will publish the preliminary estimate of the August Eurozone Harmonized Index of Consumer Prices on Friday, and the anticipated outcome will back up the case for another European Central Bank interest rate cut when policymakers meet in September.
![Moneta Markets review 2024: All you need to know](https://editorial.fxstreet.com/images/IT/Testing/Review/FXSBadgeCertifiedBackg_XtraSmall.png)
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.