The NFP is the most important economic data of the month.
Here are 4 tips for today's trading. This will help you decide where you should invest and what to look for:
1. Waiting for the NFP
The U.S. Labor Department will release its monthly nonfarm payrolls report at 12:30 GMT on Friday and experts widely believe that the results will set a rate hike by the Federal Reserve (Fed) at the meeting on June 14 in stone.
The consensus forecast is that the data will show jobs growth of 185,000 in May, following an increase of 211,000 in the previous month, while the unemployment rate is forecast to hold steady at 4.4%, its lowest level since 2007.
Average hourly earnings are expected to rise 0.2% from April after gaining 0.3% a month earlier, while the annualized rate is estimated to rise to 2.6%, from the prior 2.5%.
Stock markets celebrated a separate report from payroll processing firm ADP out Thursday that said non-farm private employment rose by a seasonally adjusted 253,000 in May, above forecasts for an increase of 185,000.
A strong report should push the USD higher and send commodities down.
2. Fed rate hike getting closer
Most experts believe that only a truly “catastrophic” report would stop the Fed from raising rates in two weeks’ time, while markets put the odds at around 88%.
With June essentially considered to be a done deal, markets will be digesting the data to adjust expectations for whether the central bank will move a second time this year and begin reducing its balance sheet.
Most analysts are suggesting a possible second increase in either September or December, though markets are more skeptical with the odds around 27% and 39%, respectively.
3. World stocks hit record high
Global stocks hit a record high on Friday with Asian markets reached their best levels in more than two years by upbeat data on U.S. manufacturing and employment.
China's Shanghai Composite ended up 0.11%, while strong gains of 1.67% pushed Japan's Nikkei past the 20,000 point mark for the first time since 2015.
European stocks followed the general path of buying sentiment on Friday with the official U.S. jobs report on tap. The benchmark Euro Stoxx 50 advanced 1.05% by 08:53 GMT, while Germany’s DAX gained 1.18%. London’s FTSE hovered just below new record highs hit earlier, trading up 0.30%.
U.S. stock futures pointed to a higher open on Wall Street as investors waited for nonfarm payrolls. At 08:55 GMT, the blue-chip Dow futures rose 0.27%, S&P 500 futures gained 0.16% and the Nasdaq 100 futures advanced 0.24%.
4. Oil drops, U.K positive data
Oil prices fell nearly 2% on Friday as U.S. President Donald Trump’s decision withdraw from the 2015 Paris Agreement to fight climate change prompted speculation of a further acceleration in U.S. drilling, sparking further worries over the global supply glut.
Drilling activity stateside has been steadily increasing in the States with Baker Hughes’ data showing last week that U.S. drillers had added rigs for the 19th week in a row, the second-longest such streak on record, implying that further gains in domestic production are ahead.
U.S. crude oil futures sank 2.05% to $47.37 at 08:56 GMT, while Brent oil slumped 1.99% to $49.62.
U.K. construction sector activity surged to a 17-month high in May, bolstering optimism over the British real estate market, industry data showed on Friday.
In a report, market research firm Markit and the Chartered Institute of Purchasing & Supply (CIPS) said that their U.K. construction purchasing managers' index rose to a seasonally adjusted 56.0 last month from April’s reading of 53.1.
Economists had expected the index to slip to 52.7 in May.
