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What Level of Volatility to Expect from July NFPs?

What Level of Volatility to Expect from July NFPs?

John Kicklighter, Yash Gandhi,

Talking Points:

  • The consensus forecast for August NFPs is a 225K increase and 5.3% unemployment rate
  • July’s data generated a mixed outcome and restrained market response
  • See the Daily FX Economic Calendar for up-to-date live economic release

The monthly Non-Farm Payrolls report and broader labor statistics from US is one of the most consistently market-moving events on the economic calendar. The data’s ultimate influence – both from a perspective of direction and severity – over the US Dollar or broader capital markets depends on the outcome. However, the coverage it garners in the financial headlines is consistently high.

Heading into the August figures due this Friday, the focus on the labor statistics will be leveraged by the anticipation of a rate hike from the Federal Reserve. The central bank maintains a dual mandate of ‘full employment’ and steady inflation when deciding monetary policy, and there are few statistics that can provide a more direct read for these important measures.

Last month, with the release of the July report, the markets were little moved by the data. Neither the US Dollar nor the S&P 500 were motivated to large moves. This was in large part due to the relatively modest ‘surprise’ in the data – the difference between the realized numbers and the official estimates. While the data can once again print in-line with forecasts and curb its ultimate influence this time again, the focus on interest rate timing can amplify an already captivated market.

NFP and Unemployment Surprise Index

NFP and Unemployment Market Reaction

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