Anticipation for Positive NFP Report on Friday Despite Grim Week for Indices

By Tomasz Wisniewski|

Published: May 05 2023, 05:48 GMT+0

Anticipation for Positive NFP Report on Friday Despite Grim Week for Indices

Welcome to NFP Friday, where we might be in for a pleasant surprise. Expectations for today’s non-farm payroll (NFP) report are low, with forecasts at 181K. However, Wednesday’s ADP report was surprisingly positive, beating expectations by a wide margin with 296K new jobs added. Analysts also predict a rise in the unemployment rate from 3.5% to 3.6%.

Yesterday was an important day for the euro, with the ECB announcing an interest rate increase of 25 basis points, following the lead of the Fed the day before. As expected, the euro dropped, ending Thursday as the weakest currency in the pack. This morning, however, the euro is recovering, though this may be more due to the weakness of the dollar than the strength of the euro. Currently, the strongest currencies are those from the antipodes: the Australian and New Zealand dollars.

Indices are also starting Friday on a positive note, but the mid-term outlook is rather grim. This week was tough for indices, as they started out strong with new long-term highs but ended close to, or on, mid-term lows. It seems that a correction is underway and next week may be bearish. However, the NFP report could have a significant impact on the markets today.

Thursday was a great day for commodity traders looking for increased volatility. Gold reached new long-term highs before reversing with a shooting star candle, while WTI oil hit new long-term lows before reversing with a hammer candle. In both cases, this may promote a short-term correction, with gold likely to decline and oil likely to rise.

Today’s earnings calendar doesn’t feature any Tier-1 companies, but we’re still waiting to see the reaction to Apple’s impressive results from yesterday. Their earnings per share came in at 1.52 (versus an expected 1.43) and revenue at 94.8 billion (versus an expected 92.9 billion). These are great results, and we’ll most likely see today’s session open with a significant bullish gap. It remains to be seen if buyers will be able to hold prices high, but most likely, they will.