Planning on trading the NFP release tomorrow?
Here’s what you need to know about the previous report, how the dollar reacted, and what’s expected for the August jobs numbers.
What happened last time?
- U.S. added 528K jobs in July vs. 250K estimate
- Unemployment rate improved from 3.6% to 3.5%
- Average hourly earnings ticked higher from 0.4% to 0.5%
- June NFP reading upgraded from 372K to 398K
Uncle Sam reported yet another upside NFP surprise for July, chalking up the fourth consecutive month in better-than-expected jobs data.The economy added 528K jobs in July, which is more than double the estimated 250K increase and also higher than the previous month’s figure. To top it off, the June report enjoyed an upgrade from 372K to 398K in hiring gains.
This was enough to bring the jobless rate down from 3.6% to 3.5% instead of holding steady as many expected. The labor force participation rate held steady at 62.1% during the month.
Wage growth was also observed, as the average hourly earnings figure accelerated to a 0.5% gain instead of slowing to 0.3%.
With that, it was no surprise that the Greenback popped sharply higher across the board when the numbers were printed.
Market watchers were already setting the bar pretty low, following mostly downbeat hints from leading indicators, so the upbeat readings were enough to get dollar bulls charging again.
However, the dollar gradually gave back its gains throughout the day, eventually returning to its pre-NFP levels against most of its forex peers.
What’s expected this time?
- August hiring to come in at 295K
- Jobless rate to hold steady at 3.5%
- Average hourly earnings to tick down to 0.4%
Number crunchers continue to predict a slowdown in U.S. hiring, with the August report expected to show a 295K increase in employment.
This might keep the jobless rate steady at 3.5% for the month, unless there are any major changes in labor force participation.Wage growth might also slow down to just a 0.4% uptick, keeping inflation fears in check.
Leading indicators are giving mixed signals so far. The ADP non-farm employment change figure came up short at 132K versus the 300K consensus for August while the JOLTS job openings report showed more positions available in the previous month.
Weaker than expected results could dampen hopes of another 0.75% interest rate hike from the Fed, especially since the latest round of inflation figures reflected easing price pressures.
Don’t forget to keep an eye out for revisions to previous reports, too!
Planning on trading the dollar but not sure which USD pair to trade? Check out the major USD pairs’ performance and take a look at USD pairs’ average volatility see if you can spot trading opportunities!
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