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US Dollar Price Action Set for Non-Farm Payrolls

US Dollar Price Action Set for Non-Farm Payrolls

Justin McQueen,
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US Dollar Price Analysis & News

  • US Dollar Eyes Non-Farm Payrolls Storm
  • Revisions Matter for NFP

Today will largely center around the US NFP report, which is a day earlier than usual given the Independence Day market holiday. Expectations are for 3mln jobs to have been created for June with the unemployment rate to have dropped 1ppt to 12.3%. However, while a figure of 3mln would mark a record monthly gain, this is far from signalling a “V” shaped recovery as figure 1 shows.

DailyFX NFP Webinar

Figure 1. Far from “V” Shaped Recovery

Revisions are Important

Another aspect to keep in mind is that there is a wide range of estimates with a high/low range of 9mln to 405k further emphasising the uncertainty around this data point, which has been skewed by furlough schemes. That said, a weaker employment report would likely have a larger impact than a better than expected release. Elsewhere, the focus will also be on revisions, after yesterday’s ADP report showed a 5mln revision higher from the prior month, however, markets will be placing a close eye on the unemployment figure, given that the BLS noted that the unemployment rate may have perhaps been 3ppts higher than reported.

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To the detriment of the US Dollar, the pick-up in risk appetite has kept the US Dollar on the back-foot ahead of the US jobs report. Selling in the greenback may be exacerbated on a firm jobs report, thus allowing for EUR/USD to make a topside breach of 1.13 with GBP/USD extending on the recent 2% gains. However, with estimates skewed for gains, a softer than expected figure by quite some margin could provide a renewed bid in the greenback as risk sentiment stalls.

US Dollar Price Chart: Daily Time Frame

Source: IG

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.