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What Today's Jobs Data Tells Us About Tomorrow's NFP News

7/1/2021

Bonds had a .03% drop in yield rates this morning to under 1.46% on good jobs data. Unemployment claims beat expectations by 24K less claims than forecasted which was 388K. The past few weeks had been over 400K claims, so the latest numbers under the 400K threshold is a great sign for the economy and the stock market. However, the dollar looks mixed from the good economic news and falling bond yields. NFP and unemployment data comes out tomorrow morning, and investors are anticipating some volatility in the wake of news as well.

Our outlook

If bond yields keep falling, it would probably look increasingly bearish for the dollar. However, yields are oscillating between the low 1.45s and 1.70s% while the the dollar index has moved 0.29% on the day. Mixed sentiment might be bearish for the dollar, but it looks like the dollar wants to climb with the stock market. Today's numbers give us a hint that we will probably see a beat in expectations in the US's unemployment numbers. As for NFP, I am not sure we will beat expectations, but it could be like the last time we saw a drop in employment change but also a drop in unemployment. My bias is that we will see a lower unemployment rate, and I think jobs will be added, but I also don't think it matters whether we beat expectations or not for the non-farm payroll report because a lower unemployment rate is bullish for USD.

Trade Setups

DXY

The DXY shows investors have mixed feeling just from recent price action on the 4H. Long wicks shooting off in either direction suggest a period of consolidation until a candle can close above resistance around 92.410. Additional support is underneath in the area between 91.45 and 91.69.

USDCAD

USDCAD still looks bullish even after breaking under support on the 4H since price has recovered back above that level. Long wicks rejecting the lows and higher lows created on this timeframe suggest more movement to the upside. Tomorrow's volatility could send price in either direction, but heavy support on the top of the consolidation channel looks promising should price come down, but price looks like it will come back up to the top around 1.24692.

USDJPY

Dollar yen off to a phenomenal morning as price surges 0.39% on the day. The yen is now looking much weaker than the dollar due to the rebounding US economy. A highly anticipated NFP report tomorrow has brought significant attention to the dollar and everyone expects good news. New support lies around 111.133.

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