Weekly Market Outlook: US Non-Farm Payrolls in Focus

March 27, 2022 23:42

While most of March's high impact economic news announcements have now passed, all eyes turn towards the US Non-Farm payrolls report on Friday. The US dollar has been mixed in recent weeks as traders instead focused on market positioning and the unwind in safe havens such as the Japanese Yen.  

However, this week is likely to be all about the US dollar and US stock markets with the ADP Non-Farm Employment Change report on Wednesday, Unemployment Claims on Thursday, Non-Farm Payrolls and the Manufacturing PMI report on Friday. 

You can learn more about some of the global themes affecting the markets in this selection of education articles.  

Weekly Forex Calendar 

Source: Forex Calendar from the MetaTrader 5 trading platform provided by Admirals.  

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Trader’s Radar – US Non-Farm Payrolls

On Friday 1 April at 1.30 pm BST, the Bureau of Labor Statistics will release the latest Average Hourly Earnings, Non-Farm Employment Change and Unemployment Rate figures. These are all key economic announcements that influence the Federal Reserve’s decision on interest rates and monetary policy.  

The health of the US economy can also be a sign of the health in the global economy. The Fed recently shocked analysts by stating they will do ‘whatever is necessary' to cool inflation. Seven and a half quarter-point interest rate hikes are now priced in with the expectation of US interest rates to be at 2.25% by the end of the year.  

Source: Admirals MetaTrader 5, USDX, Monthly - Data range: from 1 Apr 2005 to 27 Mar 2022, performed on 27 Mar 2022 at 7:00 pm GMT. Please note: Past performance is not a reliable indicator of future results. 

The monthly price chart of the US dollar index shown above highlights the long-term trading range that has developed in between the two black horizontal lines which depict horizontal resistance and horizontal support price levels.  

The rise in price from the bottom of the range highlights the recent strength the US dollar has had since the middle of last year. While the US dollar was mixed last week, it’s clear to see that in the long-term there is still strength.  

Traders may look for the US dollar to work its way back to the top of the trading range around $103.00. Traders can participate in the potential strength of the US dollar by shorting currency pairs such as EURUSD or GBPUSD, among others. 

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Corporate Trading Updates and Stock Indices 

The volatility in global stock market indices was much lower last week than in previous weeks. The European indices fared the worst with small declines in the DAX 40 and CAC 40 indices. However, US indices fared the best with the S&P 500 and Nasdaq 100 index ending last week in the green.  

It has been an impressive rally over the past few weeks but now the real test begins to see just how many buyers are left in the market. Traders may look for US indices to eventually work their way back to new all-time high price levels.  

Source: Admirals MetaTrader 5, SP500, Daily - Data range: from 10 Sep 2020 to 27 Mar 2022, performed on 27 Mar 2022 at 6:30 pm GMT. Please note: Past performance is not a reliable indicator of future results. Past five-year performance of the S&P 500: 2021 = 26.99%, 2020 = +16.17%, 2019 = +29.09%, 2018 = -5.96%, 2017 = +19.08% 

The sell-off in the S&P 500 stock market index over the past few months seems to have stalled in the middle March as price recorded a double bottom price action pattern. This is the failure for the price to make new swing lows highlighting the exhaustion of sellers.  

Since then, buyers have taken control and we now find ourselves with a higher high price cycle and the price trading above key long-term moving averages. If the momentum can continue, new record highs could be in sight if price can break through obstacles such as the next major swing high at the 4,591.00 price level.   

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Jitanchandra Solanki
Jitanchandra Solanki Financial Markets Author, Admirals London

Jitanchandra is a financial markets author with more than 15 years experience trading currencies, indices and US equities. He is an accredited Market Technician with a BA Hons degree.