US Nonfarm Payrolls Forecast: October NFP report expected to show slower job growth

• US nonfarm payrolls are expected to rise by 113,000 in October after an impressive increase of 254,000 in September.
• The US Bureau of Labor Statistics will release employment data on Friday at 12:30 GMT.
• The fate of the US dollar and future Fed rate cuts depend on US employment data.

All eyes are on the October non-farm payrolls (NFP) data, which will be released by the US Bureau of Labor Statistics (BLS) on Friday at 12:30 GMT.

US labor market data is crucial in determining future interest rate cuts from the Federal Reserve (Fed) and has a significant influence on the value of the US Dollar (USD) against its main rivals.

What to expect from the next Non-Farm Payrolls report?

Economists expect nonfarm payrolls to show that the U.S. economy added a scant 113,000 jobs in October, after a sharp gain of 254,000 in September.

The unemployment rate (EU) is likely to remain stable at 4.1% over the same period.

Meanwhile, average hourly earnings (AHE), a closely watched measure of wage inflation, are expected to rise 4.0% in the year to October, the same pace seen in September.

The October jobs report is highly anticipated for new clues about the Fed’s interest rate path, especially as industry experts and analysts speculate the Fed could pause its easing cycle next month with a report. spectacular non-farm payrolls.

However, downside risks to employment data remain as they are likely to be distorted by the two recent hurricanes and the strike at Boeing.

In a preview of the October employment situation report, analysts at TD Securities said: “The November NFP report will be extremely noisy, but we expect a rise to 70,000 below consensus. High-frequency market data labor already show some weakening, and the hurricanes and the Boeing strike could subtract another 80,000 from the reading.”

“We expect the (EU) unemployment rate to rebound to 4.3% from 4.1% as the drop was probably exaggerated, but for AHE to rise 0.4% month-on-month amid distortions,” they added.

How will US October Non-Farm Payrolls affect EUR/USD?

Before the Fed entered its ‘silent period’, several policy makers supported further interest rate cuts while warning about the outlook for inflation, echoing the US central bank’s data-dependent approach. USA

At the time of writing, markets are fully pricing in a 25 basis point (bp) rate cut from the Fed in November, with a around 70% chance of another quarter percentage point reduction in December, according to the tool CME Group’s FedWatch.

The USD has been capitalizing on US economic resilience and the odds of a less aggressive Fed easing cycle ahead of the NFP showdown on Friday.

Earlier in the week, the BLS reported that JOLTS job openings decreased to 7.44 million in September from 7.86 million in August. This reading was below the market expectation of 7.99 million, but did not alter the market’s valuation for the November rate cut move.

Automatic Data Processing (ADP) announced Wednesday that U.S. private sector employment rose by 233,000 jobs in October, accelerating from an upwardly revised 159,000 in September and better than the market estimate of 115,000. Although these figures are not always correlated with official NFP numbers, ADP’s strong jobs report eased concerns about the health of the US labor market, leaving room for an upside surprise in Friday’s payrolls data. .

If the main NFP reading surprises with payroll growth below 100,000, it could trigger a new wave of US Dollar selling. However, the greenback is expected to resume its recent bullish trend against its major rivals as the numbers settle and markets digest noisy data due to hurricanes and strikes. In such a scenario, EUR/USD traders will prepare for a swing within a familiar range.

Conversely, a stronger-than-expected NFP print and elevated wage inflation data would seal a rate cut by the Fed next week, providing additional impetus to the USD’s uptrend while dragging EUR/USD down. turn towards 1.0700.

In conclusion, the reaction to the US jobs data may be short-lived, with the greenback expected to continue its advance.

Eren Sengezer, Lead Analyst for the European Session at FXStreet, offers a brief technical outlook for EUR/USD:
“Once EUR/USD stabilizes above 1.0870, where the 200-day SMA lies, and starts using this level as support, it could gain bullish momentum. To the upside, 1.0940 (200-day SMA) 100-day) could be seen as the next hurdle before 1.1000-1.1010 (round level, 50-day SMA).”

“On the other hand, technical sellers could emerge if EUR/USD fails to clear the 1.0870 hurdle. In this scenario, 1.0800 (round level) could be seen as interim support before 1.0670 (June static level).”