US NFP Preview: Nonfarm Payrolls set for a solid 200K increase in February
- US Nonfarm Payrolls are set to rise by 200K in February after January’s stellar 353K gain.
- The United States Bureau of Labor Statistics will release the labor market data at 13:30 GMT.
- Robust employment data could provide some relief to US Dollar buyers.
The all-important Nonfarm Payrolls (NFP) data from the United States (US) is slated for release on Friday at 13:30 GMT. The US labor market data, published by the Bureau of Labor Statistics (BLS), could significantly impact the market’s pricing of when the Federal Reserve (Fed) will start lowering interest rates, eventually influencing the US Dollar’s value.
What to expect in the next Nonfarm Payrolls report?
The Nonfarm Payrolls report is likely to show a jobs addition of 200,000 to the US economy last month, down from January’s whopping 353,000 job gain. The Unemployment Rate is expected to stay unchanged at 3.7% in the reported period. A closely watched measure of wage inflation, Average Hourly Earnings, is set to rise 4.4% in the year through February, a tad slower than the 4.5% increase registered in January.
Market participants will closely scrutinize the headline NFP print and the wage inflation data to determine the timing and the scope of the Fed interest rate cut this year, especially after Fed Chair Jerome Powell delivered less hawkish comments during his testimony on the semi-annual Monetary Policy Report (MPR) before the House Financial Services Committee on Wednesday.
Powell said that interest rate cuts are still likely in the coming months if Fed officials are more confident that there is further evidence of falling inflation. Markets are currently pricing in about a 75% chance that the Fed could begin lowering rates in June, higher than the 63% probability seen a day earlier, according to the CME Group’s FedWatch Tool.
Previewing February’s jobs report, TD Securities (TDS) analysts said: “We look for February payrolls to show some moderation in job gains after January’s meaningful upside surprise.”
“The upshot is that we are looking for mixed signals from the February data, with a report that will likely point to a still-tight labor market that’s yet to act as an obstacle for a normalization in wage growth,” the TDS analysts added.
Meanwhile, the US private sector added 140,000 jobs in February, an increase from the upwardly revised 111,000 increase in January while a tad below the expected 150,000 addition, ADP reported on Wednesday. The number of job openings on the last business day of January stood at 8.86 million, the US Bureau of Labor Statistics (BLS) reported in the Job Openings and Labor Turnover Survey (JOLTS). The data also came in slightly below the market forecast of 8.9 million.
How will US February Nonfarm Payrolls affect EUR/USD?
Loosening US labor market conditions and Powell’s comments smashed the US Dollar to fresh one-month lows across its major counterparts, lifting the EUR/USD pair to a six-week high above 1.0900. Will the US jobs report help the EUR/USD gain further upside traction?
An encouraging NFP headline figure alongside hotter-than-expected wage inflation data could diminish bets for a June Fed rate cut, providing the much-needed relief to the US Dollar at the expense of the Euro. On the other hand, disappointing data could add to the downward pressure on the US Dollar while boosting EUR/USD.
Dhwani Mehta, Analyst at FXStreet, offers a brief technical outlook for EUR/USD:
“The EUR/USD pair broke through the critical 50-day Simple Moving Average (SMA) at 1.0857 on Wednesday, opening the door for further upside. The 14-day Relative Strength Index (RSI) sits just beneath the overbought territory, suggesting that there is more room for the upside.”
“Acceptance above the 1.1000 level is likely to refuel the rally toward the 1.1050 psychological level. EUR buyers will then aim for the December 2023 high of 1.1140. Conversely, the initial demand area is seen at the 1.0900 round figure, below which the 50-day SMA at 1.0856 will be tested. The next support is seen near 1.0835, where the 100- and 200-day SMAs hang around. Further south, the 21-day SMA at 1.0821 could come to the rescue of EUR/USD,” Dhwani adds.
Euro price today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.01% | 0.02% | -0.06% | -0.12% | -0.03% | 0.04% | 0.01% | |
| EUR | -0.01% | 0.00% | -0.07% | -0.14% | -0.04% | 0.01% | -0.02% | |
| GBP | -0.01% | 0.00% | -0.07% | -0.14% | -0.04% | 0.02% | -0.01% | |
| CAD | 0.06% | 0.07% | 0.07% | -0.07% | 0.03% | 0.10% | 0.07% | |
| AUD | 0.12% | 0.14% | 0.13% | 0.07% | 0.10% | 0.14% | 0.13% | |
| JPY | 0.03% | 0.05% | 0.04% | -0.03% | -0.10% | 0.07% | 0.02% | |
| NZD | -0.03% | -0.03% | -0.02% | -0.10% | -0.17% | -0.07% | -0.04% | |
| CHF | 0.01% | 0.01% | 0.01% | -0.06% | -0.12% | -0.02% | 0.03% |
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 Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.