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In an interview with Fox and Friends earlier this week, Trump shared that “big job numbers are coming on Friday.”

For newbies out there, you should know that the POTUS is talking about the July U.S. non-farm payrolls (NFP) report out tomorrow at 12:30 pm GMT.

Planning on trading the release? Here are the key points you need to know first:

Jobs numbers surprised bigly in June

  • U.S. economy added 4.8 million jobs in June vs. 3 million addition expected
  • May’s net job additions revised higher from 2.51M to 2.70M
  • The unemployment rate improved from 13.3% to 11.1%
  • Average hourly earnings weakened further from –1.0% to -1.2%

Traders saw fireworks a day early when Uncle Sam printed stronger-than-expected labor market numbers in June.

See, analysts were expecting the Bureau of Labor Statistics to adjust for an understated jobless rate in May. Instead, we saw a lower unemployment rate AND more job additions in June.

USD's Reaction to the June NFP Report
USD’s Reaction to the June NFP Report

The dollar jumped higher at the strong release, but soon gave up some of its intraday gains when the focus turned back to the high number of new coronavirus cases in the U.S. and the possibility of tighter or longer lockdown measures in some states.

Analysts expect more (but weaker) job creation in July

  • July headline NFP to reflect a net addition of 1.6M more jobs
  • July unemployment rate expected to dip from 11.1% to 10.5%
  • July average hourly earnings to improve from -1.2% to -1.0%?

Markets expect a slower pace of job creation in July as rising coronavirus cases forced some states to postpone or scale back their reopening plans.

Even leading indicators generally point to a slower momentum for the labor market:

Markit’s manufacturing PMI noted a “fractional contraction” in hiring as subdued new orders created redundancies. Its services PMI, on the other hand, cheered the first increase in employment since February after service businesses worked on their backlogs.

Backlogs and new orders also helped the employment component of ISM’s manufacturing PMI in July. Its services PMI wasn’t as rosy, though, as numbers hinted that the growth for service businesses did NOT translate to job creation for the month.

Even the ADP report failed to inspire good vibes when it only saw 167,000 net jobs increase for private sector employment. Note that markets had expected a 1.2M jobs increase after June’s 4.3M jump.

Last but not least is the closely watched Household Pulse Survey by the Census Bureau, which tracks household experiences during the COVID-19 pandemic.

See, its weekly releases – which was relatively accurate in June – suggested that 6.7M workers had lost jobs between mid-June and mid-July, including a 4.1M decrease from the first to the second week of July. Yipes!

USD may react to more than the headline numbers

If we do see “big jobs numbers” as Trump had hinted earlier this week, then the dollar may pop higher across the board during the NFP release.

But last month’s price action has taught us that traders may price in more than the headline numbers.

For one thing, markets are aware that the official numbers only reflect data collected in the first half of July when states and businesses were only starting to scale back their reopening plans.

And then there are the stimulus negotiations in Congress, which could inspire risk-taking (USD bearish) if (a) a compromise is reached this week and (b) if the details point to a softer landing for the economy.