This one is a biggie. If they were to make a film about Non Farm Friday this is the one it should be based on. It’s got everything. Suspense, surprises, weather, the fate of a country and will have half the market jumping for joy and the other half crying for their losses. All we need is a bit of love interest and it’ll clean up at the Oscars. Wolf of Wall St, pah!

In all seriousness this is a big one. We were trundling along nicely adding jobs at a reasonable pace, the Fed was tapering and the herd were running in the same direction. Then whammo, we got hit by a 74k number that blew things right out the water. But nevermind, it was the weather and this and that and the other. It’s just a blip we keep hearing. Chances are it was, but what if it does miss and miss big again?

I think you can forget excuses this time, weather or otherwise. If we get a very poor number, say sub 100k, the market is likely to take it very badly. It will throw the recovery into doubt, tapering into doubt, the whole shebang into doubt. That’s my view but the question will be how much the market buys into any excuses on a bad number. If anything December should have been a decent number if only for the seasonal factors. As for January, as we saw in the Challenger report yesterday, there’s a lot of layoffs planned in retail and a lot of part timers being let go. Of course there should be some natural seasonality accepted within the numbers but it’s how big affect that is.

Eamonn’s post sitting at the top of the site pretty much does a good job of what to look for and it is going to be a situation of sifting through the the numerous external factors rather than just being able to take the numbers as they come. The event is a crapshoot at the best of times so it doesn’t need any extra ingredients to add to the mayhem. At least we know markets will only go one of two ways.

If we get back on track with a number around the 200k mark then we’ll see a relief rally no doubt, whether it’s a straight dollar trade or a risk trade we can’t tell yet. I’m inclined to believe that it starts off as a dollar trade then moves into a risk trade so watch falls in cable for signs of a turnaround. Watch to see if the euro joins in on either trade as it’s still looking a little left behind in the growth stakes. If we blow up a big number say 300k+ then we’ll see some real fireworks.

As always, look for the boundaries of any moves, not only for a fading opp but for potential profit areas. 100.80 is looking strong in USD/JPY and the 100 big figure under that would probably be a step too far. Above 103.40/50 might offer a stall point but I wouldn’t rule out a very good number running us up to 104 and then maintaining a strong bid tone.

EUR/USD has the 38.2 fib of the July swing up at 1.3458 then the 200 dma at 1.3378, and then the targets I’m looking at around the weekly ma’s and 50.0 fib at 1.3310/25. Up above 1.37 is a decent point to look for a top and any push toward 1.38 likely to tempt euro bears into action.

Cable could see the April 2011 broken resistance line drawing dip buyers at an extreme while 1.6480/6500, then 1.66 could be the boundaries up above.

As always we’ll bring you the low down as it happens and hopefully a clear picture after deciphering what it all means. Good luck if you’re trading before during and after and I hope you all nail it big time.