Nonfarm Payrolls (NFP) in the US rose by 336,000 in September, the US Bureau of Labor Statistics (BLS) reported on Friday. This reading came in much higher than the market expectation of 170,000. The 187,000 increase recorded in August also got revised higher to 227,000.
The Unemployment Rate held steady at 3.8% and the Labor Force Participation remained unchanged at 62.8%. Other details of the jobs report revealed that the annual wage inflation, as measured by the changed in Average Hourly Earnings, edged lower to 4.2% from 4.3%.
Market reaction to Nonfarm Payrolls
The US Dollar (USD) gathered strength against its major rivals with the immediate reaction. At the time of press, the US Dollar Index was up 0.45% on a daily basis at 106.80.
US Dollar price today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Australian Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.41% | 0.32% | 0.15% | 0.78% | 0.61% | 0.53% | 0.42% | |
| EUR | -0.41% | 0.01% | -0.18% | 0.45% | 0.28% | 0.21% | 0.01% | |
| GBP | -0.42% | -0.01% | -0.28% | 0.36% | 0.19% | 0.21% | 0.00% | |
| CAD | -0.13% | 0.27% | 0.20% | 0.63% | 0.48% | 0.48% | 0.28% | |
| AUD | -0.73% | -0.32% | -0.36% | -0.58% | -0.12% | -0.08% | -0.30% | |
| JPY | -0.60% | -0.24% | -0.20% | -0.48% | 0.19% | -0.01% | -0.19% | |
| NZD | -0.63% | -0.21% | -0.30% | -0.48% | 0.15% | -0.01% | -0.30% | |
| CHF | -0.42% | -0.01% | -0.10% | -0.28% | 0.35% | 0.13% | 0.11% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
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Follow our live coverage of the Nonfarm Payrolls data and the market reaction.
This section below was published as a preview of the Nonfarm Payrolls data at 06:00 GMT.
- US Nonfarm Payrolls are set to rise by 170K in September, down from the 187K reported in July.
- US Dollar braces for a volatility spike on headline NFP and Average Hourly Earnings data.
- The Unemployment Rate in the United States is seen modestly lower at 3.7% in September.
Expectations of a final interest-rate hike by the US Federal Reserve (Fed) this quarter were reinforced after US job openings unexpectedly rose by the most in over two years to 9.610 million in August. The JOLTS Job Openings data pointed to a persistently tight labor market in the United States that could provide the Fed some leeway for more tightening.
Following the September policy meeting, several Fed policymakers have supported the narrative of the ‘higher rates for longer’, as the US economy showed encouraging signs of resilience.
The US Dollar Index capitalized on the hawkish Fed rhetoric and hit an 11-month peak above 107.00 while the US Treasury bond yields challenged 16-year highs.
However, odds of a Fed rate hike in November dropped to 23% from about 31%, after downbeat US labor market data released on Wednesday, triggering a long-due correction in the US Dollar and the US Treasury bond yields.
The latest Automatic Data Processing (ADP) report showed that the US private sector added just 89,000 in September, down from an upwardly revised 180,000 in August and far below the 153,000 estimate. US Institute for Supply Management (ISM) Services PMI fell from 54.5 to 53.6 in September, although it matched expectations.
What to expect in the next Nonfarm Payrolls report?
Friday’s Nonfarm Payrolls data for September should help clarify if the labor market is still tight, especially after a strong JOLTS report and softer private payrolls data, compelling the Federal Reserve to raise interest rates next month.
The Nonfarm Payrolls data is likely to show that the US economy added 170K jobs last month as against a job gain of 187K jobs in August. The Unemployment Rate is seen a tad lower at 3.7% in the reported period.
Average Hourly Earnings will also garner attention. The measure of wage inflation tends to have a significant impact on the Fed’s monetary policy decision-making. Average Hourly Earnings are seen rising 4.3% on a yearly basis in September, at the same pace as seen in August. On a monthly basis, Average Hourly Earnings are expected to edge 0.3% higher in September when compared to a 0.2% increase in August.
Analysts at TD Securities noted, “in terms of payrolls, we are looking for an above-market rebound to 210k above market expectations of 165k. Friday’s report will follow three consecutive prints under the 200k mark. We are also expecting the unemployment rate to stay unchanged at 3.8%.”
When will US September Nonfarm Payrolls data be released and how could it affect EUR/USD?
The Nonfarm Payrolls indicator, part of the US labor market report, will be published at 12:30 GMT on Friday. EUR/USD is attempting a tepid recovery from a ten-month low of 1.0448 set on Tuesday, as the monetary policy and macroeconomic divergences between the Fed and the European Central Bank (ECB) widen.
An upbeat NFP headline print and hot wage inflation data would strengthen market wagers for one more Fed rate hike by year-end, providing an extra leg to the ongoing upsurge in the US Dollar. EUR/USD could test levels below 1.0400.
On the other hand, the US Dollar could see a sharp correction if the data points to loosening labor market conditions and smashes hopes for any further rate hike by the Fed this year. In such a case, EUR/USD could stage a solid recovery toward 1.0650.
Dhwani Mehta, Asian Session Lead Analyst at FXStreet, offers a brief technical outlook for the EUR/USD pair and explains: “The main currency pair has moved away from multi-month troughs but the bearish potential remains intact, as the 14-day Relative Strength Index (RSI) continues to hover below the midline. Failure to find acceptance above the 1.0600 round level on its road to recovery will trigger a fresh downswing toward the 1.0448 YTD low. Deeper declines will then target the 1.0400 round figure.”
“On the flip side, if the 1.0600 static resistance is taken out, Euro buyers will challenge the downward-sloping 21-day Simple Moving Average (SMA) at 1.0616. The next relevant upside barrier is envisioned near 1.0670, where the September 21 and 22 highs align,” Dhwani adds.
Employment FAQs
Labor market conditions are a key element to assess the health of an economy and thus a key driver for currency valuation. High employment, or low unemployment, has positive implications for consumer spending and thus economic growth, boosting the value of the local currency. Moreover, a very tight labor market – a situation in which there is a shortage of workers to fill open positions – can also have implications on inflation levels and thus monetary policy as low labor supply and high demand leads to higher wages.
The pace at which salaries are growing in an economy is key for policymakers. High wage growth means that households have more money to spend, usually leading to price increases in consumer goods. In contrast to more volatile sources of inflation such as energy prices, wage growth is seen as a key component of underlying and persisting inflation as salary increases are unlikely to be undone. Central banks around the world pay close attention to wage growth data when deciding on monetary policy.
The weight that each central bank assigns to labor market conditions depends on its objectives. Some central banks explicitly have mandates related to the labor market beyond controlling inflation levels. The US Federal Reserve (Fed), for example, has the dual mandate of promoting maximum employment and stable prices. Meanwhile, the European Central Bank’s (ECB) sole mandate is to keep inflation under control. Still, and despite whatever mandates they have, labor market conditions are an important factor for policymakers given its significance as a gauge of the health of the economy and their direct relationship to inflation.