One of the best trading opportunities comes from the NFP this Friday. Since the last speech from Jerome Powell at Jackson Hole markets have been pricing in a continued aggressive policy path for the Fed. US10Y yields continued to be pressured at their recent highs, stocks dropped sharply, and the USDJPY surged.

Powell mentioned NFP data

The Fed has been taking comfort over the strong US labour market. At Jackson Hole Powell stressed two data points that the Fed wanted to look at. They were the August NFP data this Friday and the August CPI print on September 13. So, we know that US labour data will be crucial on Friday to the current narrative. One of the simple learning points is that whenever a central bank mentions a data point in particular then pay attention to that print.

The trade

Headline NFP is expected to come in at 300K. If that comes in above maximum expectations of 375K and the other metrics also come in positive then expect another run higher in the USDJPY.

The only thing to watch out for is if the JPY weakness prompts intervention from the BoJ. So, it is probably best as a short-term, intraday, scalp trade. On the other hand, if the print comes in below minimum expectations with a headline below 150K (minimum expectations) then watch for a run higher in silver. This would likely weigh on the USD as it may mean the Fed has to slow the future path of interest rates if the US economy is starting to show signs of a quicker slowdown. In this scenario, silver would typically benefit alongside gold.