U.S. nonfarm payrolls report to test FED outlook as labor market slows
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The U.S. bureau of labor statistics (BLS) will release the nonfarm payrolls (NFP) report for january at 13:30 gmt. With markets closely watching the federal reserve's (FED) policy direction, this data will be a key factor in shaping expectations for potential rate cuts in 2025.
Economists forecast payroll growth of 170,000 in January, a slowdown from 256,000 jobs added in December. The unemployment rate (UE) is expected to hold at 4.1%, while average hourly earnings (AHE) — a key wage inflation indicator — are projected to rise 3.8% year-over-year, slightly lower than december’s 3.9%.
FED policy and rate cut expectations
Following its January policy meeting, the FED kept interest rates unchanged in the 4.25%-4.50% range. However, the central bank removed its previous statement that inflation has made progress, instead acknowledging that price increases remain elevated. FED chair jerome powell reinforced a cautious stance, stating that policymakers are in no rush to adjust rates. Despite this, markets continue to price in 46.3 basis points (bps) of rate cuts by December, with a quarter-point cut fully expected by July. A weaker-than-expected NFP print could accelerate these expectations, pressuring the U.S. Dollar (USD) and boosting risk assets.
Mixed U.S. employment signals ahead of NFP
U.S. labor market data has shown signs of moderation in recent weeks: job openings fell to 7.6 million in december, down from 8.1 million in November; adp employment data revealed 183,000 private-sector jobs added in january, above expectations of 150,000. However, rising jobless claims — with 219,000 americans filing for unemployment benefits last week, up from 208,000 — suggest some softening in the labor market.
Market reaction: what to expect
Traders will be watching for signs of labor market weakness, which could further fuel expectations for fed rate cuts: NFP below 150,000: the UDS could weaken, as markets interpret soft data as further evidence that the fed will ease policy sooner than expected. this could push eur/usd toward 1.0500; NFP above 200,000: the USD could strengthen, reinforcing the FED’s higher-for-longer stance and driving EUR/USD back toward 1.0250. Technical outlook: the EUR/USD rebound from three-week lows near 1.0210 is facing resistance at 1.0408, where the 50-day simple moving average (SMA) stands. A break above 1.0468 could open the door to 1.0500, while a move below 1.0300 could see a retest of the recent lows.
Bigger picture: trade tensions and inflation risks
Beyond the labor market, investors remain focused on Donald Trump’s trade policies, particularly the tariff war with China. Higher tariffs are viewed as inflationary, which could complicate the FED’s policy path. At the same time, rising us crude and gasoline stockpiles suggest weaker demand, adding another layer of uncertainty to inflation forecasts. With global economic conditions tightening, today's NFP report will be crucial in shaping market expectations on whether the fed will move toward rate cuts in mid-2025 or extend its hawkish stance.
FED policy and rate cut expectations
Following its January policy meeting, the FED kept interest rates unchanged in the 4.25%-4.50% range. However, the central bank removed its previous statement that inflation has made progress, instead acknowledging that price increases remain elevated. FED chair jerome powell reinforced a cautious stance, stating that policymakers are in no rush to adjust rates. Despite this, markets continue to price in 46.3 basis points (bps) of rate cuts by December, with a quarter-point cut fully expected by July. A weaker-than-expected NFP print could accelerate these expectations, pressuring the U.S. Dollar (USD) and boosting risk assets.
Mixed U.S. employment signals ahead of NFP
U.S. labor market data has shown signs of moderation in recent weeks: job openings fell to 7.6 million in december, down from 8.1 million in November; adp employment data revealed 183,000 private-sector jobs added in january, above expectations of 150,000. However, rising jobless claims — with 219,000 americans filing for unemployment benefits last week, up from 208,000 — suggest some softening in the labor market.
Market reaction: what to expect
Traders will be watching for signs of labor market weakness, which could further fuel expectations for fed rate cuts: NFP below 150,000: the UDS could weaken, as markets interpret soft data as further evidence that the fed will ease policy sooner than expected. this could push eur/usd toward 1.0500; NFP above 200,000: the USD could strengthen, reinforcing the FED’s higher-for-longer stance and driving EUR/USD back toward 1.0250. Technical outlook: the EUR/USD rebound from three-week lows near 1.0210 is facing resistance at 1.0408, where the 50-day simple moving average (SMA) stands. A break above 1.0468 could open the door to 1.0500, while a move below 1.0300 could see a retest of the recent lows.
Bigger picture: trade tensions and inflation risks
Beyond the labor market, investors remain focused on Donald Trump’s trade policies, particularly the tariff war with China. Higher tariffs are viewed as inflationary, which could complicate the FED’s policy path. At the same time, rising us crude and gasoline stockpiles suggest weaker demand, adding another layer of uncertainty to inflation forecasts. With global economic conditions tightening, today's NFP report will be crucial in shaping market expectations on whether the fed will move toward rate cuts in mid-2025 or extend its hawkish stance.