The eagerly anticipated Non-Farm Employment Change is expected this Good Friday. This crucial parameter measures the job market’s health from the previous month. As one of the leading indicators of consumer spending, job creation holds significant weight for overall economic activity.
However, the real question lies in the ‘Actual’ versus ‘Forecast’ outcome. A positive surprise in the numbers could be just what the currency needs to thrive.
Highlights
As anticipation builds for the upcoming NFP report, the Federal Reserve seems divided on whether or not to push for one last rate hike next month. Meanwhile, all leading indicators for NFP have seen a concerning decline over the last month.
But could there be hope for the US dollar? As it tests longer-term support, a successful jobs report could be just the boost it needs for a potential bounce back. Will the numbers deliver or disappoint? Only time will tell.
Despite expectations, 2023 saw a booming US economy with only a slight moderation in inflation and a tight job market. However, this month’s NFP report poses a challenge to that trend, as leading indicators suggest a loosening labor market compared to last month.
The report is now crucial, as traders are evenly split on an impending rate hike from the FOMC. All eyes are on Jerome Powell and his team, waiting to see which way the scales will tip.
The Predictions
It’s that time of the month again, the release of the NFP report! But before we dive into the numbers, let’s take a look at some of the indicators that can help us predict the outcome. First up, the ISM Services PMI Employment, metric showed a 3% drop from the previous month’s reading.
Meanwhile, the ISM Manufacturing PMI Employment metric painted a bleak picture with a solid contractionary reading. The ADP Employment report wasn’t much better either, coming in lower than expected.
And just when we thought things couldn’t get worse, the four-week moving average of initial unemployment claims showed signs of turning higher. All in all, the puzzle pieces are coming together to paint a picture of what we can expect from the NFP report this month.
The latest jobs report is expected to fall slightly below expectations, with job growth potentially hovering between 150K to 250K.
However, predicting these fluctuations has proven to be quite the challenge, so any forecasts – including ours – should be taken with a grain of salt. Instead, keep an eye out for the average hourly earnings figure, which saw a 0.2% monthly uptick last month. This could be just as important as the headline number.
The Dollar Effect
The US dollar took a beating in March, marked by a significant drop of over 3% and nearing 1-year lows around 102.00.
Traders looking for potential opportunities might want to keep an eye out for selling EUR/USD if a strong US jobs report suggests a smaller interest rate gap between the European Central Bank and the Federal Reserve going into the summer. With the currency pair testing major resistance below 1.10, a holiday weekend pullback could be in the cards.
As the job market falters, savvy traders are keeping their eyes on GBP/USD. This currency pair has recently broken through resistance levels, offering a tantalizing opportunity for those who believe in its upward trajectory.
Though there may be some retesting taking place at the moment, experts predict that the GBP/USD could continue to soar to new heights with a little bit of luck and supportive fundamentals. If you’re ready to take a risk and see what this exciting currency has to offer, keep a close eye on GBP/USD in the coming days and weeks.
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