The Nonfarm Payrolls (NFP) report for October, set to be released today by the US Bureau of Labor Statistics (BLS), is expected to significantly influence both the Federal Reserve's policy outlook and the EUR/USD pair. The report is projected to indicate an addition of 180K jobs, nearly half of September's increase of 336K jobs. This data could potentially affect the US Dollar (USD) as well, following a recent sell-off spurred by Federal Reserve Chairman Jerome Powell's non-committal stance on further tightening.
The US Dollar experienced a sell-off despite the Federal Reserve maintaining the policy rate within the 5.25%-5.50% range. According to CME Group’s FedWatch Tool, markets have priced in a 20% chance of a rate increase in December and a 25% chance in January, with expected rate cuts of 85 basis points next year.
In October, the Automatic Data Processing (NASDAQ:ADP) reported a rise in US private sector payrolls by 113K, falling short of the estimated 150K and compared to an addition of 89K jobs in September. Meanwhile, the Job Openings and Labor Turnover Summary (JOLTS) report indicated a slight increase in job openings at the end of September to 9.553M.
Analysts at TD (TSX:TD) Securities are expecting the NFP data to confirm the addition of 180K jobs in October, with the Unemployment Rate remaining steady at 3.8%. Average Hourly Earnings are predicted to rise by 4.0% over the year in October.
The upcoming NFP data could have a substantial impact on the EUR/USD pair. A strong NFP headline print and hot wage inflation data could boost USD while pulling EUR/USD back toward 1.0500. Alternatively, weak data could push EUR/USD towards 1.0750 and suggest that the Fed’s tightening cycle is over. The NFP data also influences the price of Gold, with higher-than-expected figures typically depressing the Gold price. The NFP data will be published at 12:30 GMT today.
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