empty
05.04.2024 10:46 AM
What awaits markets in wake of US nonfarm payrolls

Most analysts again predict a deterioration in the labor market in the US, but all their expectations since the beginning of this year have turned out to be greatly underestimated. What kind of data will there be today? The number of new jobs soared from December last year to February. The question is whether there will really be a decline in March.

So, according to the consensus, the US public and private sectors are expected to create 212,000 new jobs in March, up from 275,000 in April. The unemployment rate is also expected to remain unchanged at 3.9%.

In addition to these figures, the average hourly wage will certainly attract attention. It is expected that it will slacken growth to 4.1% in annual terms from 4.3%, but in monthly terms, wages will add 0.3% in March against 0.1% in February.

Now let's look at the possible market reaction to these economic statistics.

As we previously indicated, market participants still want to believe that the Federal Reserve will cut its key interest rate three times this year. Earlier this week, Federal Reserve Chairman Jerome Powell again dropped a hint, arguing that the regulator was still waiting for the right moment to start cutting interest rates. You are certainly aware that the main condition for monetary easing should be a steady decline in inflation below 3% to the target level of 2% or close to it, as well as a deterioration in employment and, of course, an increase in wages, which directly stimulates demand for goods and services, boosting inflation acceleration.

But based on current principles for assessing the state of the American labor market, regular monthly job growth above 200,000 indicates good momentum. This, in turn, suggests that demand for goods and services will remain high and maintain inflationary pressure. In this case, the question arises: how the central bank can lower interest rates in such conditions? The logic of assessing the current situation, on the contrary, indicates the need to increase the interest rate by 0.25%. Otherwise, the regulator will simply need to forget about the cherished 2% mark.

If the data turns out to be in line with expectations or higher, this could destroy the Fed's timeline for a rate cut in May. In this case, the central bank will again promise to lower interest rates. But will the market believe it?

At the same time, if by some miracle, the number of new jobs falls below the landmark level of 200,000, then Powell's recent promise to cut interest rates this year will receive good motivational support. In turn, demand for stocks will skyrocket again and the dollar and Treasury yields will fall in parallel.

Time will tell which scenario we will see today.

Intraday forecast

This image is no longer relevant

This image is no longer relevant

GBP/USD

The GBP/USD pair is consolidating above the support level of 1.2600. If NFPs data shows growth above the forecast, then the instrument may break through this support level and rush towards 1.2530. At the same time, an unexpected decline in the number of new jobs below 200,000 could support GBP/USD and encourage its growth towards 1.2725.

USD/JPY

The USD/JPY pair is also consolidating above 151.00. Negative employment news can put pressure on the instrument. So, the price is likely to drop to 149.85. But, if the number of new jobs increases, then we can expect a local increase in the pair to 153.00.

Pati Gani,
Analytical expert of InstaForex
© 2007-2025
Summary
Urgency
Analytic
Viktor Vasilevsky
Start trade
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

EUR/USD Overview – July 14. The Fed's and Trump's Positions Remain Unchanged

The EUR/USD currency pair continued a mild and weak downward movement on Friday. As we have mentioned many times before, the current move is a pure correction, so there

Paolo Greco 04:33 2025-07-14 UTC+2

The Dollar Is Becoming a Risk Currency

In my reviews, I've regularly noted that the decline in demand for the U.S. dollar is not just a matter of price depreciation. We're talking about a currency that

Chin Zhao 00:42 2025-07-14 UTC+2

The Market Believes Trump Will Back Down

What is happening in the financial markets right now can only be described as a paradox, and many economists are noting it. Take the U.S. stock market, for example: initially

Chin Zhao 00:42 2025-07-14 UTC+2

EUR/USD. Weekly Preview: U.S. Inflation, Retail Sales, ZEW Indices, and China's GDP

The upcoming trading week will be marked by U.S. inflation data. Reports on CPI and PPI growth will be released, along with the University of Michigan Consumer Sentiment Index. However

Irina Manzenko 00:41 2025-07-14 UTC+2

U.S. Dollar. Weekly Preview

In the upcoming week in the U.S., reports on inflation and industrial production will be released, along with a few other moderately interesting indicators. The most important one is undoubtedly

Chin Zhao 00:41 2025-07-14 UTC+2

British Pound. Weekly Preview

Over the past two weeks, the pound has declined more than the euro, yet the wave patterns of both instruments are almost identical. Accordingly, a three-wave corrective structure should also

Chin Zhao 00:41 2025-07-14 UTC+2

USD/JPY. Analysis and Forecast

Earlier, U.S. President Donald Trump imposed 25% tariffs on all Japanese exports to the United States, which will take effect on August 1. This move exacerbates Japan's economic challenges, which

Irina Yanina 14:21 2025-07-11 UTC+2

Market fears nothing

The S&P 500 reached another all-time high, with rotation being the hallmark of the US equity market. Investors are aggressively buying up stocks that underperformed in the first half

Marek Petkovich 10:50 2025-07-11 UTC+2

What to Watch for on July 11th? A Fundamental Overview for Beginners

There are very few macroeconomic publications scheduled for Friday, but the volume is still greater than on any previous day this week. The UK will release GDP and industrial production

Paolo Greco 08:50 2025-07-11 UTC+2

GBP/USD Overview on July 11, 2025

The GBP/USD currency pair failed to consolidate above the moving average on Thursday, so the correction continues for now. Throughout Thursday, the GBP/USD pair was unable to hold above

Paolo Greco 07:15 2025-07-11 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.