The US is returning to the publication of delayed macroeconomic data. On Thursday at 13:30 GMT, the Bureau of Labor Statistics will present the September Nonfarm Payrolls report — a key indicator of the labor market’s condition. Markets are watching the release closely: the September figures could influence the Federal Reserve’s decision as early as December.
The market expects moderate employment growth
Economists forecast that the number of new jobs will increase by about 50,000 — after a very weak 22,000 in August. The unemployment rate is expected to remain at 4.3 percent.
Average hourly earnings, an important indicator of inflationary pressure, are also expected to stabilize near 3.7 percent year-over-year — at the August level.
TD Securities allows for stronger employment growth — up to 100,000 — due to an increase in private sector jobs. Government jobs, in their estimation, may decrease by 25,000.
The dollar strengthens ahead of the report
The dollar has already started to strengthen amid NFP expectations. EUR/USD has fallen back below 1.1600, reacting to cautious comments from Fed officials and weak private sector employment data.
The latest statements from the regulator show: the Fed is in no hurry to cut rates. The minutes of the October meeting directly indicate that cheaper borrowing could hinder the fight against inflation.
After the minutes were published, the probability of a December rate cut fell to 33 percent — from 50 percent earlier and 65 percent a week ago.
Raw labor market data increases uncertainty
Recent employment reports look mixed:
- ADP data showed private employment growth of 42,000 — above forecast
- The Challenger report records a 183 percent increase in announced layoffs, the worst October result in two decades
- The ISM manufacturing index fell to 48.7, while the services sector rose to 52.4 thanks to an increase in new orders
This heterogeneous data adds intrigue to the September NFP — even though the report is considered ‘outdated’ due to the publication delay.
How might NFP affect EUR/USD dynamics?
According to Wells Fargo, this report will be the last full set of data before the Fed’s December meeting. Therefore, the market reaction will be strong.
The scenarios are as follows:
- Weak data: employment below 50,000, unemployment rising above 4.3 percent. This will increase expectations of a rate cut in December. The dollar will weaken, EUR/USD may rise to 1.1700.
- Strong data: employment above forecast and stable or falling unemployment. This will remove the likelihood of a rate cut. The pair may fall below 1.1400.
The technical picture for EUR/USD points to downside risks
According to FXStreet, the pair closed the day below the 21-day moving average. The RSI remains confidently below the 50 mark, confirming the downward momentum.
Nearest levels:
- support — 1.1469, then 1.1395 (200-day SMA)
- demand zone for buyers — 1.1350
- for EUR/USD to recover, it needs to return above 1.1574
- next target — 1.1650 and then 1.1700
What’s next?
The labor market remains a key benchmark for the Fed. If the NFP confirms cooling, the regulator will have arguments for easing policy. If the report is strong, the dollar will strengthen further, and expectations of a rate cut will be postponed indefinitely.
In the coming weeks, the market will trade on a combination of inflation, employment, and Fed rhetoric — factors that determine the entire currency segment.
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