Breaking: US Nonfarm Payrolls increase by 119,000 in September vs. 50,000 expected
Nonfarm Payrolls (NFP) in the United States (US) rose by 119,000 in September, the US Bureau of Labor Statistics (BLS) reported on Thursday. This reading followed the 4,000 decrease (revised from +22,000) recorded in August and surpassed the market expectation of 50,000.
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Other details of the report showed that the Unemployment Rate rose to 4.4% from 4.3% in this period, while the Labor Force Participation Rate edged higher to 62.4% from 62.3%. Finally, annual wage inflation, as measured by the change in the Average Hourly Earnings, held steady at 3.8% YoY, compared to the market expectation of 3.7%.
“The change in total nonfarm payroll employment for July was revised down by 7,000, from +79,000 to +72,000, and the change for August was revised down by 26,000, from +22,000 to -4,000. With these revisions, employment in July and August combined is 33,000 lower than previously reported,” the BLS noted in its press release.
Market reaction to September Nonfarm Payrolls data
This report doesn't seem to be having a significant impact on the US Dollar's performance against its major rivals. At the time of press, the USD Index was up 0.1% on the day at 100.20.
US Dollar Price This week
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.87% | 0.68% | 1.92% | 0.24% | 0.76% | 0.98% | 1.54% | |
| EUR | -0.87% | -0.07% | 1.42% | -0.61% | -0.13% | 0.13% | 0.68% | |
| GBP | -0.68% | 0.07% | 1.26% | -0.52% | -0.05% | 0.21% | 0.76% | |
| JPY | -1.92% | -1.42% | -1.26% | -1.65% | -1.14% | -0.93% | -0.42% | |
| CAD | -0.24% | 0.61% | 0.52% | 1.65% | 0.52% | 0.76% | 1.29% | |
| AUD | -0.76% | 0.13% | 0.05% | 1.14% | -0.52% | 0.26% | 0.81% | |
| NZD | -0.98% | -0.13% | -0.21% | 0.93% | -0.76% | -0.26% | 0.55% | |
| CHF | -1.54% | -0.68% | -0.76% | 0.42% | -1.29% | -0.81% | -0.55% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
This section below was published as a preview of the September Nonfarm Payrolls data at 05:00 GMT.
- Nonfarm Payrolls are expected to rise by 50K in September, more than doubling the August increase of 22K.
- The United States Bureau of Labor Statistics will publish the delayed jobs data on Thursday at 13:30 GMT.
- The US employment data is set to rock the US Dollar as it is eagerly awaited by markets.
The United States (US) Bureau of Labor Statistics (BLS) releases the delayed Nonfarm Payrolls (NFP) data for September on Thursday at 13:30 GMT.
The US Dollar (USD) traders eagerly await the September employment report for clear hints on the health of the labor market and whether the US Federal Reserve (Fed) will lower interest rates next month.
What to expect from the next Nonfarm Payrolls report?
Economists expect Nonfarm Payrolls to rise by 50,000 in September after increasing by a meagre 22,000 in August. The Unemployment Rate (UE) is likely to stabilize at 4.3% during the same period.
Meanwhile, Average Hourly Earnings (AHE), a closely watched measure of wage inflation, are expected to rise by 3.7% year-over-year (YoY), at the same pace as seen in August.
Previewing the September employment report, TD Securities analysts said: “Job gains likely rebounded to 100K in September, supported by private NFP increasing 125K. Government jobs likely declined 25K.”
“We also look for the UE rate to go sideways at 4.3% as layoffs remain subdued. AHE likely moderated to 0.2% MoM (3.6% YoY),” they added.
How will the US September Nonfarm Payrolls affect EUR/USD?
The US Dollar has snapped its previous week’s pullback against its major currency rivals, staging an impressive turnaround against its major currency rivals as it gears up for the NFP showdown.
The renewed USD strength has pushed the EUR/USD pair back below the 1.1600 threshold. Will the downside continue?
A recent slew of prudent Fed commentaries and weak US private sector employment data have scaled back expectations of another 25 basis points (bps) interest rate cut by the central bank in December. Fed policymakers remain increasingly divided about how to balance inflation risks against a cooling labor market, prompting them to warrant caution on further monetary policy easing.
The Minutes of the October monetary policy meeting showed on Wednesday that “policymakers cautioned that lower borrowing costs could undermine the fight against inflation.”
Following the Minutes release, the odds for a December Fed rate cut declined to 33%, according to the CME Group’s FedWatch Tool, having seen around 50% before the event and at 65% a week ago.
On the economic data front, the Automatic Data Processing (ADP) Employment Change report, released on November 5, showed that US private payrolls increased by 42,000 jobs in October, exceeding expectations of a 25,000 gain.
Meanwhile, data published by the executive outplacement firm Challenger, Gray & Christmas on November 6 showed that corporations announced a 183.1% monthly surge in layoffs, marking the worst October in over two decades, per Reuters.
Additionally, the Institute for Supply Management (ISM) Manufacturing Purchasing Managers Index (PMI) came in at 48.7 in October, coming in lower than the forecast of 49.5. Contrarily, the ISM Services PMI increased more than expected to 52.4 last month due to a solid jump in New Orders.
Amidst resurfacing US economic and labor market concerns, the September employment report, albeit stale, is eagerly awaited by markets to gauge the direction of the Fed’s interest rates in the coming months.
“Even as the September Nonfarm report will be somewhat dated, it may be the final full employment report the Fed has in hand ahead of its December monetary policy meeting,” economists at Wells Fargo said ahead of the release.
A reading below the 50,000 mark and an unexpected increase in the Unemployment Rate could affirm a slack in the US jobs market, reviving bets for a rate cut by the Fed in December. In such a case, the USD could come under intense selling pressure, lifting EUR/USD back toward 1.1700.
In contrast, if the NFP shows an outstanding job gain and the Unemployment Rate stays at 4.3% or even decreases, EUR/USD could extend the bearish momentum toward levels under 1.1400. Stellar jobs data would take bets of a December Fed rate cut off the table, providing additional legs to the USD upside.
Dhwani Mehta, Asian Session Lead Analyst at FXStreet, offers a brief technical outlook for EUR/USD:
“The main currency pair closed Wednesday below the 21-day Simple Moving Average (SMA) at 1.1574, reinforcing further declines. Meanwhile, the 14-day Relative Strength Index (RSI) holds well below the midline on the daily chart, adding credence to the bearish potential.”
“If the downside extends, the next support is seen at the November 5 low of 1.1469, below which the 200-day SMA at 1.1395 will be threatened. The line in the sand for buyers is located at the 1.1350 psychological level. On the flip side, any recovery will need acceptance above the 21-day SMA at 1.1574. The next relevant bullish target is seen at around 1.1650, where the 50-day and 100-day SMAs intersect. Additional upside could lead to the 1.1700 round level.”
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
Author
FXStreet Team
FXStreet
