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Will the U.S. non-farm payrolls (NFP) report keep dollar bulls happy this week?

Here are points to know if you’re planning on trading the event:

What happened last time?

  • U.S. economy added 263K jobs in Nov 2022 vs. 200K forecast
  • Nov unemployment rate held steady at 3.7% as expected
  • Nov average hourly earnings up by 0.6% m/m vs. 0.3% consensus
  • Oct NFP reading upgraded from 261K to 284K

Uncle Sam’s labor market still seems to be firing on all cylinders, as the latest jobs figures all surpassed market expectations.

Employment picked up by 263K in November last year, outpacing the consensus at 200K, while the previous month’s reading was upgraded from 261K to 284K. This was enough to keep the jobless rate unchanged at 3.7% as expected.

The labor force participation rate was also little changed at 62.1% while the average hourly earnings figure reflected stronger wage growth at 0.6% versus the projected 0.3% uptick.

Overall, the numbers pointed to a tight labor market, which was good news for dollar bulls.

USD Pairs 15-min Forex Charts Overlay

USD Pairs 15-min Forex Charts Overlay from TradingView

What’s expected this time?

  • NFP figure to show slower jobs growth at 200K in December 2022
  • Jobless rate to stay unchanged at 3.7%
  • Average hourly earnings to dip from 0.6% to 0.4% m/m

Number crunchers are predicting yet another slowdown in hiring for December last year.

The NFP is expected to show only a 200K increase in hiring, which might translate to no change in the jobless rate for another month.

Meanwhile, wage growth could slow to just 0.4% and dampen inflation prospects.

Leading indicators are still hinting at good figures, possibly even an upside surprise. returned to expansion territory (51.4 percent, up 3 percentage points) after contracting in November (48.4 percent)

The employment component of ISM’s manufacturing PMI returned to expansion territory from November’s 48.4 figure to 51.4 in December.

The U.S. Job Openings and Labor Turnover Survey (JOLTS) reported further gains in job openings, clocking in at 10.46 million against October’s 10.51 million figure.

By the looks of it, Uncle Sam’s job market ain’t showing signs of a slowdown just yet. Plus, the FOMC did signal in their December meeting that they are seeing higher rates for “some time” ahead.

If the actual NFP figure does surprise to the upside, dollar bulls could get more confirmation that the Fed has room to keep tightening monetary policy in the coming months.

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