US Nonfarm Payrolls Expected to Show Signs of Labor Market Softening
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The upcoming US Nonfarm Payrolls (NFP) report for October has market participants on edge, as the latest data could offer significant clues on the Federal Reserve’s (Fed) policy direction and impact the US Dollar’s trajectory. Released by the Bureau of Labor Statistics (BLS) at 12:30 GMT on Friday, the report is expected to reveal a more modest gain of 113,000 new jobs, down from September’s 254,000 increase.
Anticipated Labor Market Deceleration
The October NFP report is likely to show a cooling labor market, with expectations pinned on a smaller gain of 113,000 jobs. Key factors potentially affecting this number include recent disruptions from two hurricanes and the Boeing strike. TD Securities analysts anticipate an even lower result of 70,000 due to these variables, with a possible increase in the Unemployment Rate (UE) to 4.3% from 4.1%. Average Hourly Earnings (AHE) are projected to rise by 0.4% on a monthly basis, signaling steady wage growth.
Impact on Federal Reserve Policy and the US Dollar
The NFP data is expected to weigh heavily on the Fed’s upcoming policy decisions. Market indicators, including the CME Group’s FedWatch tool, currently show full pricing for a 25 basis points (bps) rate cut in November and a high probability of another cut in December. Strong labor figures would support a less aggressive Fed rate-cut trajectory, while weaker-than-expected data could boost rate-cut expectations, pressuring the US Dollar.
In the week preceding the NFP, mixed US labor data has added to the uncertainty. The ADP reported a strong gain of 233,000 private-sector jobs, while the JOLTS report revealed a decline in job openings to 7.44 million. A sub-100,000 NFP result could prompt a USD sell-off; however, an eventual recovery is anticipated as markets digest the data’s temporary distortions.
EUR/USD Outlook and Technical Indicators
The EUR/USD pair will likely experience volatility in response to the NFP release. European Session Lead Analyst Eren Sengezer of FXStreet notes that if EUR/USD surpasses 1.0870 and holds, it may gather momentum toward 1.0940 and potentially 1.1000. Conversely, a failure to clear the 1.0870 level could see EUR/USD retreat to 1.0800, with further support around 1.0670.
In conclusion, while the NFP report may drive short-term fluctuations in the US Dollar, the Greenback’s underlying trend remains strong, supported by resilient US economic fundamentals.
Anticipated Labor Market Deceleration
The October NFP report is likely to show a cooling labor market, with expectations pinned on a smaller gain of 113,000 jobs. Key factors potentially affecting this number include recent disruptions from two hurricanes and the Boeing strike. TD Securities analysts anticipate an even lower result of 70,000 due to these variables, with a possible increase in the Unemployment Rate (UE) to 4.3% from 4.1%. Average Hourly Earnings (AHE) are projected to rise by 0.4% on a monthly basis, signaling steady wage growth.
Impact on Federal Reserve Policy and the US Dollar
The NFP data is expected to weigh heavily on the Fed’s upcoming policy decisions. Market indicators, including the CME Group’s FedWatch tool, currently show full pricing for a 25 basis points (bps) rate cut in November and a high probability of another cut in December. Strong labor figures would support a less aggressive Fed rate-cut trajectory, while weaker-than-expected data could boost rate-cut expectations, pressuring the US Dollar.
In the week preceding the NFP, mixed US labor data has added to the uncertainty. The ADP reported a strong gain of 233,000 private-sector jobs, while the JOLTS report revealed a decline in job openings to 7.44 million. A sub-100,000 NFP result could prompt a USD sell-off; however, an eventual recovery is anticipated as markets digest the data’s temporary distortions.
EUR/USD Outlook and Technical Indicators
The EUR/USD pair will likely experience volatility in response to the NFP release. European Session Lead Analyst Eren Sengezer of FXStreet notes that if EUR/USD surpasses 1.0870 and holds, it may gather momentum toward 1.0940 and potentially 1.1000. Conversely, a failure to clear the 1.0870 level could see EUR/USD retreat to 1.0800, with further support around 1.0670.
In conclusion, while the NFP report may drive short-term fluctuations in the US Dollar, the Greenback’s underlying trend remains strong, supported by resilient US economic fundamentals.