Nonfarm payrolls print at 467k, USD in focus after oversold


NFP, Nonfarm Payrolls, USD Talking Points:

  • This morning brought the release of Non-farm Payrolls for the month of January.
  • Expectations were very low after last week’s ADP report showed a 307k contraction from an expectation of a 201,000 gain.
  • The analysis in the article is based on: price action and card formations. For more information on price action or chart patterns, check out our Referus Education section.

This morning brings the release of Nonfarm payrolls from the United States, and the bar is incredibly low. This is a live article, meaning it will be updated around the event, with each update indicated by the time it was added before that particular entry.

8:55

Now that the excitement is starting to settle down a bit, it’s time to dig deeper into the numbers. The unemployment rate even stood at 4% against the expectation of 3.9%. The average hourly wage came in at no less than 5.7% against a forecast of 5.2%.

This was a very important focus for the Fed. When they got rid of inflationary pressures last year and called it “transient,” the problem was that inflation was not yet reflected in wages. This morning talks about that, highlighting the fact that inflation is hitting workers’ wages, which of course will affect companies that now have higher personnel costs.

This could be a plus for bond yields and a negative for stocks, all other things being equal.

Sure enough, 10-year Treasury yields are at their highest level in more than two years.

10-Year Treasury Yields

NFP: Nonfarm Payrolls Print At 467k, USD In Focus After Oversold

Chart prepared by James Stanley; TNX on Tradingview

8:50

EUR/USD is falling from the resistance that was set right at the monthly high. This was the same level as a few weeks ago, at 1.1483. If this move holds, a very attractive double-top formation can be built.

EUR/USD four hour price chart

NFP: Nonfarm Payrolls Print At 467k, USD In Focus After Oversold

Chart prepared by James Stanley; EURUSD on Tradingview

8:40

NFP was just released and the headline number was a whopping +467k, further proving that ADP’s employment numbers are a poor predictor of nonfarm payrolls.

The immediate move was a shoot higher in the USD as the currency was fairly oversold before release. This goes hand in hand with the pullback in EUR/USD, which was at its highest overbought since December 2020.

US Dollar 15-Minute Price Chart

NFP: Nonfarm Payrolls Print At 467k, USD In Focus After Oversold

Chart prepared by James Stanley; USD, DXY on Tradingview

Stocks don’t seem to like this imprint as expectations for a week of NFP and slower job growth or, perhaps even contraction at that data point, could support a slower Fed launch. But that’s clearly not what we’ve had since this morning’s release and the bid is exiting stocks, especially the price-sensitive Nasdaq 100, which is tipping downward to a key support point around 14.375 on the chart.

Nasdaq 100 Four Hour Price Chart

NFP: Nonfarm Payrolls Print At 467k, USD In Focus After Oversold

Chart prepared by James Stanley; Nasdaq 100 on Tradingview

8:20

Ahead of the event, the US dollar is extremely weak with the currency entering oversold territory on the four-hour chart. This has become a more recent event in the USD as the currency was oversold a few weeks ago after a 7% CPI print, only to move into overbought territory a few weeks later after the FOMC rate decision.

A lot has changed in the week since that Fed meeting. Expectations for US economic data have soured and yesterday’s ECB interest rate decision has sparked hopes for an eventual policy change from the European Central Bank, with some research firms even calling for hikes later this year. The US dollar built into a evening star formation on Monday, which is often followed for the purpose of bearish reversals – and that formation has since continued to fill with RSI now plunging into oversold territory.

US dollar four hour price chart

NFP: Nonfarm Payrolls Print At 467k, USD In Focus After Oversold

Chart prepared by James Stanley; USD, DXY on Tradingview

That represented a strong shift in the EUR/USD pair, which makes up more than 57% of the DXY’s composition; so going along with that oversold value in USD is an overbought value in EUR/USD.

In EUR/USD, the levels remain a concern as prices now rise to their highs for the month, with a hiccup in the run-up to the NFP release. That level is at 1.1484 and just above that, at 1.1500 is a big psychological levelthat marks the top of a longer-term resistance zone.

Reflecting again on the other side of the USD, EUR/USD had prepared for this topside move earlier in the week, building in a morning star formation, often followed for the purpose of bullish reversals. These levels are in play ahead of this morning’s NFP release, and the prospect of reversals in both USD and EUR/USD could be interesting themes for this morning’s event.

EUR/USD four hour price chart

NFP: Nonfarm Payrolls Print At 467k, USD In Focus After Oversold

Chart prepared by James Stanley; EURUSD on Tradingview

— Written by James Stanley, Senior Strategist for Referus

Get in touch and follow James on Twitter: @JStanleyFX