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 June. The popularly known NFP report is scheduled for release at 12:30 GMT and is expected to show that the economy added 268K jobs during the reported month, down from the 390K in May. The unemployment rate, however, is expected to hold steady at 3.6% in June. 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 ING offered a brief preview of the report and explained: “We think payrolls may grow somewhere in the 250-300K range, which should still be enough to keep the unemployment rate at 3.6% and wages continuing to tick higher. For us to seriously consider changing our July Fed call we would need to see payrolls growth fall with the unemployment rate moving a couple of tenths higher and wage growth showing signs of stagnating. Even then we would still probably need to see a surprisingly large decline in inflation the following week.”

How could the data affect EUR/USD?

Heading into the key release, the US dollar shot to a fresh two-decade high amid growing acceptance that the Fed would retain its aggressive policy tightening path. This, in turn, dragged the EUR/USD pair below the 1.0100 mark for the first time since December 2002. Against the backdrop of the hawkish FOMC meeting minutes released earlier this week, a stronger NFP print would reaffirm bets for faster rate hikes by the Fed and further lift the buck.

Conversely, a weaker reading could add to worries about a possible global recession and might do little to trigger any meaningful USD corrective pullback. This, along with the energy crisis in Europe, which might drag the Eurozone economy faster and deeper into recession, suggests that the path of least resistance for the EUR/USD pair is to the downside.

According to Eren Sengezer, Editor at FXStreet: “EUR/USD remains extremely oversold in the near term with the Relative Strength ındex (RSI) indicator on the four-hour chart staying well below 30. The descending regression channel coming from late-June stays intact and the pair's technical correction is likely to meet resistance at the upper limit of that channel at 1.0150.”

Eren further outlined important technical levels to trade EUR/USD: “With a four-hour close above that level, the pair could extend its recovery toward 1.0200 (psychological level, static level, 20-period SMA). On the downside, interim support seems to have formed at 1.0070 (static level) before the pair could target the all-important parity.”

Key Notes

  •  Nonfarm Payrolls Preview: Three dollar-positive scenarios, only one negative one

  •  NFP Preview: Forecasts from 10 major banks, labour market loses momentum

  •  EUR/USD Forecast: Door opens to parity

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.