On Friday we are supposed to receive the September NFP report unless the release will be delayed due to the first US government shutdown in 17 years. It really will not impact the figure itself and in the end it should not matter when the report will be released.
So far just about every NFP report in 2013 has disappointed and while the unemployment rate has decreased for the wrong reasons. A healthy labor market sees the unemployment rate decrease as more unemployed are finding jobs and therefore become employed preferably in high quality jobs which are positive for the economy and will stimulate growth.
Each drop in the unemployment rate we witnessed was due to the fact that more unemployed gave up hope to find employment and they stopped their search which means that the government does no longer count them as unemployed which explains the monthly decrease in the unemployment rate.
A lot of new traders are often tricked by the headline figure which is very misleading and on its own without dissecting the report should be largely ignored. Roughly six out of ten jobs created under Mr. Obama have been low quality jobs or temporary jobs which are not beneficial for a long-term recovery.
The amount and duration of the long-term unemployed is alarming and does not move at all which suggests that he current administration largely ignores them. Another big problem is the rate of under-employed which continues to grow; so does the rate of temporary job openings which have been a huge driver in the headline figure, but not for the economy.
Economists expect September payrolls rose by 180K while the unemployment rate held steady at 7.3%. Traders should be prepared for a negative surprise in the headline which could come in below 150K and together with potential downward revisions to the previous two months we may be in for a dismal NFP when it will be released. Hourly earnings may have remained stagnant which further takes away disposable income from consumers.
Any negative surprise will be USD negative and traders should be prepared for some violent moves in either direction. At the same time a report in line or better than expected could initiate a temporary phase of USD strength in order to shake-off extreme conditions.