When is the US monthly jobs report (NFP) and how could it affect EUR/USD?

US monthly jobs report overview

Friday's US economic docket highlights the release of the closely watched US monthly jobs data, popularly known as NFP. The report is scheduled to be released at 12:30GMT and is expected to show that the US economy added 1.4 million jobs in August, lower than the previous month's reading of 1.763 million. Meanwhile, the unemployment rate is anticipated to have edged lower to 9.8% from 10.2% recorded in July. Average hourly earnings are estimated to be flat in August as against the previous month's 0.2% gain, while annual wages are anticipated to slip to 4.5% from 4.8%.

Conversely, analysts at ING are looking for a more modest payrolls growth figure of 900K and also see some upside for the unemployment rate. “With uncertainty over the Federal government, unemployment benefits boost likely incentivising some people to start looking for work more actively. Remember that under the current rules you do not have to be looking for work to claim unemployment benefits, but you need to do so to be counted as officially unemployed. A rise in the participation rate would therefore likely mean the unemployment rate remains stable despite a rise in employment.”

How could the data affect EUR/USD?

A stronger than expected jobs growth and wage figures could assist the US dollar to add to its recent recovery from two-year lows. This, in turn, should pave the way for an extension of the EUR/USD pair's corrective slide from levels just above the key 1.2000 psychological mark. Alternatively, a weaker-than-anticipated NFP reading would add to uncertainty over the outlook for the US economy. This will further fuel expectations that the Fed will keep interest rates lower for longer and set the stage for the resumption of the USD's sharp near-term downtrend.

Meanwhile, Yohay Elam, FXStreet's own Analyst provided important technical levels to trade the EUR/USD pair: "Looking down, uptrend support awaits at 1.1785. It nearly converges with the 200 SMA. The range is narrowing and points to an explosion in one direction or another. Momentum is to the downside. Below 1.1785, the next levels to watch are 1.1750 and 1.17. Further resistance beyond 1.1865 is at 1.1885, 1.1925 and 1.1960."

Key Notes

   •  Non-Farm Payrolls August Preview: US dollar is waiting for good news

   •  NFP Preview: Eight major banks expectations for August jobs report

   •  EUR/USD Forecast: Why Non-Farm Payrolls may disappoint, triggering a bullish breakout

About the US monthly jobs report

The nonfarm payrolls released by the US Department of Labor presents the number of new jobs created during the previous month, in all non-agricultural business. The monthly changes in payrolls can be extremely volatile, due to its high relation with economic policy decisions made by the Central Bank. The number is also subject to strong reviews in the upcoming months, and those reviews also tend to trigger volatility in the forex board. Generally speaking, a high reading is seen as positive (or bullish) for the USD, while a low reading is seen as negative (or bearish), although previous months reviews and the unemployment rate are as relevant as the headline figure.