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. The popularly known NFP report is scheduled for release at 12:30 GMT and is expected to show that the economy added 500K new jobs in September. The unemployment rate is expected to edge lower to 5.1% from 5.2% in August. Meanwhile, Wednesday's upbeat US ADP report on private-sector employment might have lifted expectations from the official figures.

Analysts at Westpac sounded more optimistic about the report and explained: “September is likely to see a robust bounce in job creation, we forecast a rise of 600K. However, part of this gain may instead come through revisions to August and July. To end 2022, if payrolls average a gain of around 450K a month then, even with participation returning near its pre-pandemic rate, the unemployment rate will tend to its full employment level. We expect underemployment to also follow this trend, tightening up the labour market and supporting moderate gains in wages hence.”

How could the data affect EUR/USD?

A stronger than expected report will reinforce expectations that the Fed will soon begin tapering its bond purchases and possibly hike interest rates in 2022. This, however, is already priced in the markets, suggesting that even a slight disappointment will be enough to prompt some profit-taking around the US dollar. Nevertheless, the data is set to infuse a fresh bout of volatility in the markets and produce some meaningful trading opportunities around the EUR/USD pair.

Meanwhile, Eren Sengezer, Editor at FXStreet, offered a brief technical outlook for the major: “The Relative Strength Index (RSI) indicator on the four-hour chart turned south after rising toward 50 on Thursday, suggesting that buyers are struggling to take control of EUR/USD.”

Eren also outlined important technical levels to trade the EUR/USD pair: “On the downside, sellers will look for a violation of 1.1530 - 15-month low set on October 6 - and target 1.1500 in case that support fails. Finally, the former resistance level from June 2020 at 1.1425 aligns as the next line of defence.”

“The initial resistance is located at 1.1570 (20-period SMA, Thursday high) ahead of 1.1620 - Fibonacci 23.6% retracement of the downtrend that started in early September). If buyers manage to hold the price above the latter at the end of a day, the recovery could extend toward 1.1680 (Fibonacci 38.2% retracement),” Eren added further.

Key Notes

  •  US Nonfarm Payrolls September Preview: How far will markets go when the Fed tapers?

  •  NFP Preview: Forecasts from 11 major banks for September jobs report, the best hint for Fed’s November taper decision

  •  EUR/USD Forecast: Lack of bullish momentum punctuates euro's fragility

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.