What NFP data could surprise the market?

In the Asian session, Eamonn published a nice article on the range of estimates for today’s US NFP report. These ranges are important in terms of market reaction. Here’s what Eamonn wrote on this topic:


Data results that fall outside of market low and high expectations tend to move markets more significantly for several reasons:

  • Surprise
    Factor: Markets often price in expectations based on forecasts and
    previous trends. When data significantly deviates from these
    expectations, it creates a surprise effect. This can lead to rapid
    revaluation of assets as investors and traders reassess their positions
    based on the new information.

  • Psychological
    Impact: Investors and traders are influenced by psychological factors.
    Extreme data points can evoke strong emotional reactions, leading to
    overreactions in the market. This can amplify market movements,
    especially in the short term.

  • Risk
    Reassessment: Unexpected data can lead to a reassessment of risk. If
    data significantly underperforms or outperforms expectations, it can
    change the perceived risk of certain investments. For instance,
    better-than-expected economic data may reduce the perceived risk of
    investing in equities, leading to a market rally.

  • Triggering
    of Automated Trading: In today’s markets, a significant portion of
    trading is done by algorithms. These automated systems often have
    pre-set conditions or thresholds that, when triggered by unexpected
    data, can lead to large-scale buying or selling.

  • Impact
    on Monetary and Fiscal Policies: Data that is significantly off from
    expectations can influence the policies of central banks and
    governments. For example, in the case of the NFP due today, a weaker
    jobs report will fuel speculation of nearer and larger Federal Open
    Market Committee (FOMC) rate cuts. A stronger report will diminish such

  • Liquidity
    and Market Depth: In some cases, extreme data points can affect market
    liquidity. If the data is unexpected enough, it might lead to a
    temporary imbalance in buyers and sellers, causing larger market moves
    until a new equilibrium is found.

  • Chain
    Reactions and Correlations: Financial markets are interconnected. A
    significant move in one market or asset class due to unexpected data can
    lead to correlated moves in other markets, amplifying the overall
    market impact.


Another important input in market’s reaction is the distribution of forecasts. In fact, although the range of estimates for the US unemployment rate today is 3.9%-4.1%, only 8.7% of forecasters see a 4.1% rate, while 71% expect 4.0% and 20.3% anticipate 3.9%.

This means that even if the unemployment rate prints within the range of estimates at 4.1%, it would still be seen as a surprise and trigger a big market reaction. I can see the market going into risk-off on a 4.1% unemployement rate.

For the Non-Farm Payrolls, although the range of estimates is between 140K and 250K, a number outside the 170K-230K range would be seen as a surprise.

Lastly, for the Average Hourly Earnings Y/Y, 66% of forecasters see a 3.9% figure, while 17.3% expect 4.0% and 17.2% a 3.8% reading.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

Go to Forexlive

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