Nonfarm Payrolls (NFP) in the United States (US) rose by 73,000 in July, the US Bureau of Labor Statistics (BLS) reported on Friday. This reading followed the 14,000 increase (revised from 147,000) recorded in June and came in worse than the market expectation of 110,000.
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Other details of the report showed that the Unemployment Rate edged higher to 4.2% from 4.1% in June, as expected, while the Labor Force Participation Rate ticked down to 62.2% from 62.3%. Finally, annual wage inflation, as measured by the change in the Average Hourly Earnings, rose to 3.9% from 3.8%.
“Revisions for May and June were larger than normal. The change in total nonfarm payroll employment for May was revised down by 125,000, from +144,000 to +19,000, and the change for June was revised down by 133,000, from +147,000 to +14,000,” the BLS noted in its press release. “With these revisions, employment in May and June combined is 258,000 lower than previously reported.”
Market reaction to US Nonfarm Payrolls data
The US Dollar (USD) came under heavy selling pressure with the immediate reaction to the disappointing Nonfarm Payrolls data. At the time of press, the USD Index was down 0.65% on the day at 99.40.
US Dollar PRICE Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.72% | -0.33% | -0.90% | -0.17% | -0.60% | 0.00% | -0.43% | |
| EUR | 0.72% | 0.50% | -0.21% | 0.62% | 0.27% | 0.60% | 0.37% | |
| GBP | 0.33% | -0.50% | -0.61% | 0.12% | -0.24% | 0.30% | -0.12% | |
| JPY | 0.90% | 0.21% | 0.61% | 0.73% | 0.31% | 0.79% | 0.47% | |
| CAD | 0.17% | -0.62% | -0.12% | -0.73% | -0.45% | 0.19% | -0.25% | |
| AUD | 0.60% | -0.27% | 0.24% | -0.31% | 0.45% | 0.54% | 0.23% | |
| NZD | -0.00% | -0.60% | -0.30% | -0.79% | -0.19% | -0.54% | -0.33% | |
| CHF | 0.43% | -0.37% | 0.12% | -0.47% | 0.25% | -0.23% | 0.33% |
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 story was corrected on August 1 at 12:31 GMT to say in the first line that Nonfarm Payrolls rose by 73,000 in July, not 147,000.)
This section below was published as a preview of the US Nonfarm Payrolls data at 05:00 GMT.
- United States Nonfarm Payrolls are foreseen at 110,000 in July, down from the 147,000 posted in June.
- The US Unemployment Rate is expected to have ticked higher to 4.2% from 4.1% in the month.
- The US Dollar ends July with solid gains, reversing a five-month losing streak.
A pretty wild week is coming to an end with the release of the all-important United States (US) Nonfarm Payrolls (NFP) data for July, which will be published by the Bureau of Labor Statistics (BLS) on Friday at 12:30 GMT.
The report is a picture of the labor market at the end of each month, usually released on the first Friday of the following one. It indicates how many new jobs were added, how wage growth developed and the unemployment rate. The Federal Reserve (Fed) uses these data to make its monetary policy decisions amid its dual mandate of keeping stable prices and maximum employment. This time, however, the Fed announced its latest decision this Wednesday, somehow limiting the potential impact of the NFP on financial markets.
What to expect from the July Nonfarm Payrolls report?
Market analysts anticipated that the US added 110,000 new job positions in July, below the 147,000 gained in June. The Unemployment Rate is expected to have ticked higher, from 4.1% to 4.2%.
Additionally, wage inflation, as measured by Average Hourly Earnings, is expected to have risen by 0.3% in the month and by 3.8% from a year earlier, higher than the 0.2% and 3.7% respectively posted in June.
Ahead of the release, multiple employment-related figures hint at a healthy labor market, while the Fed has stuck to its wait-and-see stance.
On the economic data front, the US reported that the number of job openings on the last business day of June stood at 7.43 million, according to the Job Openings and Labor Turnover Survey (JOLTS) released by the BLS. The reading was below the 7.77 million openings (revised from 7.76 million) recorded in May and came in below the market expectation of 7.55 million.
The ADP Employment Change report released on Wednesday was more encouraging, as it showed that the private sector added 104,000 new job positions in July, while the June loss was revised to 23,000 from the previous estimate of -33,000.
In the meantime, the Fed announced that it left the benchmark interest rate unchanged, floating between 4.25% and 4.50% following its July meeting. Within the Federal Open Market Committee (FOMC), two dissenters voted for a rate cut: Governors Christopher Waller and Michelle Bowman.
Chair Jerome Powell explained that with inflation still above the Fed’s 2% goal and the labor market still tight, the central bank should keep rates at their current levels, while leaving policymakers well-positioned to respond in a timely way. Powell also refused to give in to US President Trump’s constant pressure to lower interest rates, reiterating that the impact of tariffs on inflation is yet to be seen.
Given Powell’s hawkish stance, the odds of a rate cut in September fell from nearly 60% before the meeting to roughly 43% after the press conference, according to the CME Fedwatch Tool.
It is worth noting that the flash estimate of the Q2 Gross Domestic Product (GDP) showed the US economy grew at an annualized rate of 3%, much better than the 0.5% decline from the first quarter and better than the 2.4% expected.
How will the US July Nonfarm Payrolls affect EUR/USD?
Trade-war-related headlines in recent days have been mixed. The week started with optimism amid the announcement of a deal between the US and the European Union (EU), which followed a similar announcement between the US and Japan. The White House also reported continued talks with China. Hopes of an agreement helped the US Dollar (USD) run against all its major rivals, while the Fed’s hawkishness fueled the Greenback’s rally.
Mid-week, however, and as the August 1 deadline loomed, deals with other major trading counterparts such as Canada, Australia or India were, and still are, in the air. Furthermore, Trump announced a whopping 50% tariff on Brazilian imports and a universal 50% tariff on imports of semi-finished copper products and copper-intensive derivative products, effective August 1.
The USD retains its strength ahead of the NFP release, with the EUR/USD pair trading near the 1.1400 threshold. Generally speaking, a solid NFP report showing higher-than-anticipated job creation and a steady unemployment rate should boost demand for the American currency, not only because of the good news, but also because it reinforces the Fed’s wait-and-see stance. The opposite scenario is also valid, with a disappointing headline coupled with a higher-than-anticipated Unemployment Rate weighing on the Greenback.
Moderate job creation alongside an uptick in the Unemployment Rate, as expected, could have a limited impact, but would be overall positive for the USD.
Valeria Bednarik, FXStreet Chief Analyst, says: “The EUR/USD pair trades at its lowest in over a month, shedding roughly 400 pips from its July peak at 1.1830. The USD advance was a long-overdue correction, as the Dollar Index fell for five consecutive months before turning the tide in July. With that in mind, EUR/USD may well pierce the 1.1400 level on a strong NFP report, and extend its slide towards the 1.1340 region, where it set a monthly low in June. Additional slides could result in a fall towards the 1.1280 area.”
Bednarik adds: “The EUR/USD pair needs to recover the 1.1470 level to shrug off the bearish momentum and be able to extend its recovery towards the 1.1550 area. A weekly close around the latter, however, will not be enough to confirm an interim bottom, with the risk still skewed to the downside in the mid-term.”
Employment FAQs
Labor market conditions are a key element to assess the health of an economy and thus a key driver for currency valuation. High employment, or low unemployment, has positive implications for consumer spending and thus economic growth, boosting the value of the local currency. Moreover, a very tight labor market – a situation in which there is a shortage of workers to fill open positions – can also have implications on inflation levels and thus monetary policy as low labor supply and high demand leads to higher wages.
The pace at which salaries are growing in an economy is key for policymakers. High wage growth means that households have more money to spend, usually leading to price increases in consumer goods. In contrast to more volatile sources of inflation such as energy prices, wage growth is seen as a key component of underlying and persisting inflation as salary increases are unlikely to be undone. Central banks around the world pay close attention to wage growth data when deciding on monetary policy.
The weight that each central bank assigns to labor market conditions depends on its objectives. Some central banks explicitly have mandates related to the labor market beyond controlling inflation levels. The US Federal Reserve (Fed), for example, has the dual mandate of promoting maximum employment and stable prices. Meanwhile, the European Central Bank’s (ECB) sole mandate is to keep inflation under control. Still, and despite whatever mandates they have, labor market conditions are an important factor for policymakers given its significance as a gauge of the health of the economy and their direct relationship to inflation.
(This story was corrected on August 1 at 08:00 GMT to mention July instead of June in the subheadline ‘How will the US July Nonfarm Payrolls affect EUR/USD?’)
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