Good morning. The Nonfarm Payrolls report (NFP) is so powerful, it’s been known to move major FX pairs by over 100 pips in seconds. Traders once nicknamed it the “Widow Maker” because one surprise print could blow up accounts instantly.

It’s the one Friday where even gold and the dollar get stage fright.

-Shaun A, Jonathan Kibbler, Jordon Mellor

MARKETS

Prices supplied by Google Finance as of 4:00am ET - stock prices as of close. Here is what the prices mean.

TRADER INSIGHTS

It’s the last quiet hours before NFP hits. The screens look calm, dollar steady, euro coiling, gold hovering, but it’s the kind of calm that doesn’t last. I’ve been here enough times to know the market is loading the spring. One print and everything shifts.

The dollar index is pinned between 98 and 97, and on the surface it looks calm. But this isn’t real balance , it’s the market catching its breath before jobs data. NFP has a way of turning quiet ranges into violent breaks.

A strong print fuels the case for the Fed to wait on deeper cuts, and that sends DXY charging toward 100 putting pressure on euro and pound. A weak number, on the other hand, breaks the base and reopens the path to 96. For me, this level is the compass, the moment DXY tips, every major pair follows.

EUR/USD is holding near 1.1680, coiling around the 50-day MA as traders wait for NFP.

The uptrend from April remains intact above the 1.1527 base, but momentum won’t return until price clears 1.1808 resistance. A strong NFP drags it toward 1.1664 or even 1.1527, while a weak print opens the door back to the highs.

G/U is stuck inside a tightening wedge, trading around 1.3470. Price keeps bouncing between the falling trendline near 1.3600 and support at 1.3430, showing how indecisive the market is ahead of U.K. GDP next week.

For today, NFP is the trigger: a strong U.S. print could push GBP/USD through 1.3430 and toward 1.3135, while a weak number gives bulls room to test the wedge top at 1.3600.

Until then, it’s just drift inside the range.

Gold is consolidating after its breakout, trading just under the fresh all-time high at $3,548. The move above $3,500 confirmed a major shift, flipping that level into key support.

If the dollar softens on NFP, the path points toward $3,600 as the next target. On the downside, any pullback should first test $3,500, with deeper support at $3,426 the top of the old range. As long as those levels hold, the breakout structure stays bullish.

These hours before NFP always feel like a false calm.

Charts look balanced, traders sit tight, but positioning is heavy under the surface.

I’m not trying to outguess the number, I’m watching the reaction. For me, DXY is the compass: whichever way the dollar breaks, the rest of the market follows. These are the last quiet hours before the storm.

-Shaun A

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TRADER INSIGHTS

The Non-Farm Payroll report also known as NFP measures the number of jobs added or lost in the US during the previous month, excluding farm working (hence non farm). It’s the biggest and most anticipated data drop and it happens every first Friday of the month. 

It's important because it highlights the strength or weakness of the world's largest economy. 

A weak number can show the economy is fragile or under pressure. A strong number could signal a growing or strong economy. 

And for us that matters. 

Retail traders in particular love NFP because it often triggers huge moves in price across the popular USD pairs, Indices like the S&P500 or NASDAQ and even the fan favourite gold. 

But it’s imperative to know that spreads can widen, slippage can occur, and entries and stops may not be filled where you want. 

This makes trading NFP a bit of a double edged sword. It can be an exciting opportunity, but also a nightmare to trade. 

I am not here to tell you what to do with your money, and I will tell you my thoughts at the end, but let’s weigh up the pros and cons.

Pros:

Cons:

This month’s forecast is for +75k jobs to be added to the US economy in August, which is well below what is considered to be good, which is usually 200k+. Traders will still have last month’s shock in mind too, where we saw June’s NFP number revised down to just 14k jobs created. 

The Federal Reserve's chances of cutting rates in September shot up because of this and the USD remained weaker. 

Will we see a repeat of this again? 

A weak print of forecasts or below and we will likely see the USD weakness continue.

A strong print of 150k+ I think the USD turns positive on that. 

Let’s face it, trading is a zero sum game, there will always be a loser on the end of a winner. But this is also a long term game. Traders often forget it's not about what we do today, it's what we do over a month or 3 months or a year. 

So in my opinion, I wouldn’t trade NFP directly with a prop account. 

I would wait to see where price moved and how it moved, then think about the overall outlook for the market to make a decision. But trading it when the volatility is the highest, isn’t the smartest idea in my book.

-Jonathan Kibbler

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ANSWER

Answer: Nonfarm Payrolls (NFP)