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 13:30GMT and economists anticipate that hiring might have picked up again following an interruption in December. Consensus estimates point to an addition of 50K new jobs in January and the unemployment rate is anticipated to hold steady at 6.7%.

Conversely, analysts at Westpac are anticipating a decline of 50K but sounded more optimistic about the prospects for a quick recovery. “If the vaccine rollout occurs as planned and additional stimulus is passed by Congress, this job loss will reverse quickly. In contrast, the recovery back to full employment will prove long and difficult. Not only is the unemployment rate currently almost twice its pre-pandemic level, but this is with participation 2ppts lower than before COVID-19. Employment will need strong, sustained gains to recover, and only then will wages stand a chance of growing robustly.”

How could the data affect EUR/USD?

The US dollar has recently benefitted from a fresh leg up in the US Treasury bond yields, amid firming expectations for massive fiscal spending and improving macro data. A weaker than expected reading would allow the Biden administration to pressure on the US Congress to act on the proposed stimulus plan. This, in turn, should push the US bond yields even higher and continue underpinning the greenback. Alternatively, a stronger reading will further lift the optimism over the outlook for the economy and again prove positive for the buck. Hence, the path of least resistance for the USD remains to the upside, which would set the stage for a further near-term depreciating move for the EUR/USD pair.

Meanwhile, Yohay Elam, FXStreet's own Analyst offered a brief technical outlook and also provided important technical levels to trade the EUR/USD pair: "After breaking below 1.20, euro/dollar is clearly trending down, and suffering from downside momentum on the four-hour chart. However, the Relative Strength Index is just at 30, signaling oversold conditions. Support awaits at the fresh 2021 low of 1.2050, and it is followed by 1.1925, 1.1880 and 1.1850 – all were stepping stones on the way up in November 2020. Resistance is at 1.20, followed by 1.2050, a former triple-bottom. Further above, 1.2090 and 1.2130 are in play."

Key Notes

  •  Nonfarm Payrolls January Preview: Waiting for the dollar bid

  •  ADP and Purchasing Managers' Indexes point to higher payrolls

  •  EUR/USD Forecast: Correction time? Sky-high Nonfarm Payrolls expectations may trigger a bounce

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.