The US economy is set to release the June non-farm payrolls report on Thursday this week and it might be crucial in setting the tone for USD movement in the long run for forex traders. Short-term volatile moves are also expected but the pace of hiring could have a bigger picture impact on Fed monetary policy stance.
For the month of June, the economy probably added 214,000 jobs. This is weaker compared to the previous 217,000 rise in hiring and May’s 282,000 jobs gains. The jobless rate is likely to hold steady at 6.3%, pending any changes with the participation rate. Average hourly earnings are slated to show a 0.2% uptick.
Forex Traders and NFP Forecasts
The US dollar has been in a steady decline over the past few days, after the FOMC statement turned out to be less hawkish than forex traders expected. The Fed downgraded their growth forecast for the year while Yellen declined to specify when the Fed might start hiking interest rates, sending a clear message that the US central bank isn’t considering tightening monetary policy just yet.
With that, forex traders looked for strong improvements in US data to see whether or not the Fed might be convinced to be more optimistic with their forecasts. So far, most of the reports failed to impress and analysts are predicting another disappointment for the NFP release.
If that happens, the US dollar could be in for a sharper selloff, especially against currencies with central banks ready to start tightening sooner or later. USD could give up more ground to the pound and the New Zealand dollar. It could also weaken against the Canadian dollar, which is drawing forex traders support from rising oil prices.
It would take a much stronger than expected NFP reading to revive the US dollar’s rallies, as anything below 250,000 would likely keep gains at bay.
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