When is the US monthly jobs report (NFP) and how could it affect EUR/USD?

US monthly jobs report overview

Friday's US economic docket highlights the release of the closely-watched US monthly jobs data for April. The popularly known NFP report is scheduled for release at 12:30 GMT and is expected to show that the economy added 391K jobs during the reported month, down from the 431K in March. The unemployment rate, however, is expected to edge lower to 3.5% in April from 3.6% previous. Apart from this, investors will take cues from Average Hourly Earnings, which could add to rising inflationary pressures.

Analysts at Goldman Sachs offered a brief preview and sounded less optimistic about the report: “We estimate NFP rose by 300K in April. We estimate a one-tenth drop in the unemployment rate to 3.5%, reflecting a solid or strong rise in household employment partially offset by another 0.1pp rise in labour force participation to 62.5%. While labour demand remains at elevated levels and dining activity has returned to normal, seasonally-adjusted job growth tends to slow during the spring hiring season when the labour market is tight.”

How could the data affect EUR/USD?

Heading into the key data risk, the US dollar eased a bit from a two-decade high touched earlier this Friday and assisted the EUR/USD pair to rebound over 100 pips from sub-1.0500 levels. That said, expectations that the Fed would need to take more drastic action to curb soaring and elevated US Treasury bond yields should act as a tailwind for the buck. A stronger NFP report will reinforce speculations and attract fresh USD buying. Conversely, any disappointment is more likely to be overshadowed by a generally weaker tone around the equity markets. This, along with concerns that the European economy will suffer the most from the Ukraine crisis, suggests that the path of least resistance for the pair is to the downside.

Eren Sengezer, Editor FXStreet, offered a brief technical outlook and outlined important technical levels to trade EUR/USD: “The pair is trading near the static resistance of 1.0560, which is reinforced by the 50-period SMA on the four-hour chart, and a four-hour close above that level could open the door for a rebound toward 1.0600 (psychological level, Fibonacci 23.6% retracement level of the latest downtrend). Finally, 1.0660 (Fibonacci 38.2% retracement) forms the next significant resistance.”

“On the downside, 1.0540 (20-period SMA) aligns as interim support ahead of 1.0500 (psychological level and 1.0470 (multi-year low set on April April 26),” Eren added further.

Key Notes

  •  Nonfarm Payrolls Preview: Could employment become a new headache for the Fed?

  •  NFP Preview: Forecasts from 12 major banks, robust job growth

  •  EUR/USD Forecast: Euro's recovery attempts to remain as technical corrections

About the US monthly jobs report

The nonfarm payrolls released by the US Department of Labor presents the number of new jobs created during the previous month, in all non-agricultural business. The monthly changes in payrolls can be extremely volatile, due to its high relation with economic policy decisions made by the Central Bank. The number is also subject to strong reviews in the upcoming months, and those reviews also tend to trigger volatility in the forex board. Generally speaking, a high reading is seen as positive (or bullish) for the USD, while a low reading is seen as negative (or bearish), although previous months reviews and the unemployment rate are as relevant as the headline figure.