US labor market: what to expect from volatile NFP?

One of the main fundamental events for Forex traders this week will be the release of fresh labor statistics from the US, coming out this Friday. NonFarm Payrolls, Average Hourly Earnings, and Unemployment Rate can have a significant impact on the US currency.

NonFarm Payrolls

Last data: 75K
Consensus forecast: 160K

The June report will have a greater impact than usual due to the volatility of the average NFP over the past four months. 312K of new jobs in January brought a three-month offset of the average figures to 245K - the best indicator in three years. But the February’s 56K, and then the May’s 75K, turned out to be much lower than expected and below the average monthly level, which rather strongly added volatility to this indicator.

Non-farm payrolls are expected to increase by 160K in June, after more than modest 75K numbers in May. Private companies and firms are expected to add 153K jobs after increasing by 90K in the previous month. But employment among government servants will decrease by 15K jobs.

If this forecast is justified, then traders should expect a moderate growth of the US dollar relative to its main competitors. In case of a significant excess of the projected figures, short-term volatility in the foreign exchange market is possible.

Average Hourly Earnings

Last data: 0.2%
Consensus forecast: 0.3%

We believe that the new data on the average hourly earnings on a monthly basis will grow to a level of 0.3%. Taking into account the overall rather low level of inflation in the United States, the likelihood that employees are currently feeling real wage growth has increased.

If this forecast is justified, it will contribute positively to the American currency.

Unemployment Rate

Last data: 3.6%
Consensus forecast: 3.6%

Despite the rather volatile non-farm payrolls indicator, we believe that the US unemployment rate will remain at historic lows of 3.6%. This fact can also significantly neutralize the effect in case of weak NFP data.

If this forecast is justified, then in combination with good figures on NFP and wages, this can lead to the strengthening of the American dollar.

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Forex trading recommendations for today:

EURUSD:  Buy. Entry point – 1, 1282. Take Profit – 1, 1301. Stop Loss – 1, 1249.

GBPUSD:  Sell. Entry point – 1, 2588. Take Profit – 1, 2564. Stop Loss – 1, 2629.

AUDUSD:  Buy. Entry point – 0, 7035. Take Profit – 0, 7051. Stop Loss – 0, 7007.