US Non-Farm Payrolls Preview: What to Expect of EUR/USD?
The USD selling has gained further traction as we progress towards the US jobs release, with the EUR/USD pair
staging a minor-rebound above 1.14 handle. The major bounced-off a dip
below the last and advances further as markets resort to repositioning
ahead of the highly influential US labour market report.
Will a stronger NFP + hourly wages print keep June Fed hike alive?
The April non-farm payrolls report is expected to show a 200,000 increase in payrolls after March's 215,000, while hourly wages should remain unchanged at 0.3%. Also, the unemployment rate is seen unchanged at 5.0% from last.
Focus is likely to remain on the hourly wages and net job additions data, which will shape the next rate hike decision of the Fed. Overall, markets are expecting a better show today, in terms of the details of the employment report, which may further bolster the case for a June Fed rate hike.
A stronger jobs report is likely to provide the much-need impetus to the USD bulls, triggering an extensive USD rally across the board, knocking-off EUR/USD towards 1.1350-1300 levels. While a downside surprise may push back Fed rate hike prospects towards December.
Banks’ expectations on the US jobs report:
BAML: “The solid employment report we expect (NFP +190k) will leave the 6mma average at a healthy 224,000 evidence of continued labor market tightening. We expect wages to rise a healthy 0.2%, leaving the y/y change stable at 2.3%.”
Credit Agricole: “We expect April nonfarm payrolls to rise by 190K vs. 215K in March...The April unemployment rate may decline marginally but is likely round to 5.0% rather than 4.9%. Given a sustained recovery in global financial conditions, we expect the data to come in stronger and Fed commentary to sound more constructive.”
Barclays: “We forecast nonfarm payroll growth of 250k.Such an outturn would indicate that job growth accelerated from the March reading of 215k and the 209k average in Q1. we forecast average hourly earnings to rise 0.3% m/m and 2.4% y/y in April. In line with our view that US labor markets remain healthy, we expect the average workweek to hold steady at 34.5 hours.”
EUR/USD Technical Levels to watch on NFP
Valeria Bednarik, Chief Analyst at FXStreet noted, “Upcoming moves (in EUR/USD) will depend on how the market takes the report, and particularly wages, which will probably define the trend for today. The 1.1460 is the immediate resistance, and further gains beyond the level should lead to a test of 1.1530, whilst beyond this last, the rally can extend up to 1.1600.”
“1.1380 is the support to watch, as a break below it on a strong report can see the decline extending down to 1.1300/1.1330.”