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 September. The popularly known NFP report is scheduled for release at 12:30 GMT and is expected to show that the economy added 250K jobs during the reported month, down from the 315K in August. The unemployment rate, however, is expected to hold steady at 3.7% in September. Apart from this, investors will take cues from Average Hourly Earnings, which could offer fresh insight into the possibility of a further rise in inflationary pressures.

Analysts at Societe Generale are more optimistic and offer their expectations on the upcoming US jobs data: “We project a 280K gain. The unemployment rate for September is expected to decline to 3.6% from 3.7% in August. The monthly flows are volatile. If there are no returnees, or if there is a net exodus from the labor force rather than re-entrants, the unemployment rate could drop even more than the 3.6% we project. Wages are expected to rise 0.5% MoM in September. We view the shortfall seen in August, when wages rose 0.3%, as noise in the data rather than the beginning of a new trend.”

How could the data affect EUR/USD?

Ahead of the key release, growing acceptance for another supersized 75 bps Fed rate hike move in November continues to act as a tailwind for the US dollar. A stronger print should reaffirm hawkish Fed expectations and lift the US Treasury bond yields higher, along with the greenback. Conversely, a weaker reading will add to growing worried about a deeper economic downturn and underpin the safe-haven buck. This, in turn, suggest that the path of least resistance for the EUR/USD pair is to the downside.

Eren Sengezer, Editor at FXStreet, offers a brief technical overview and writes: “Following Thursday's decline, the Relative Strength Index (RSI) indicator on the four-hour chart dropped below 50. The indicator, however, has been moving sideways since then, suggesting that sellers remain on the sidelines for the time being.”

Eren also outlines important technical levels to trade the EUR/USD pair: “On the downside, 0.9780 (Fibonacci 50% retracement of the latest uptrend) aligns as first support ahead of 0.9720 (Fibonacci 61.8% retracement) and 0.9650 (static level).”

“Resistances are located at 0.9830 (Fibonacci 38.2% retracement, 100-period SMA), 0.9900 (psychological level, Fibonacci 23.6% retracement) and 0.9920 (200-period SMA),” Eren adds further.

Key Notes

  •  Nonfarm Payrolls Preview: Five scenarios for trading King Dollar as markets plead for pain

  •  NFP Preview: Forecasts from nine major banks, employment trend slows down

  •  EUR/USD Forecast: US jobs report to determine next short-term direction

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.