The US NFP Update: What to Wait for?

What will happen?

The US Bureau of Labor Statistics will announce average hourly earnings, nonfarm employment change (NFP), and the unemployment rate on May 6, at 15:30 MT time. This data is published monthly, usually on the first Friday of the month. Average hourly earnings and nonfarm payrolls don’t include the farming industry due to its seasonality. The unemployment rate is a key indicator of overall economic health that helps analysts assess the US economic situation.

How can USD react?

Despite worries about inflation and the Russian-Ukrainian conflict, US businesses are still hiring at full capacity. More people are returning to the labor market, including retired people, probably attracted by higher wages. In March, the central bank raised interest rates by a quarter of a percentage point for the first time since 2018 to curb high prices.

The previous release encouraged the growth of the USD in many pairs. For example, the GBPUSD lost almost 600 points. The unemployment rate was 3.7% vs. 3.6% expected, and nonfarm payroll was 431K VS. 492K. For the last six months, the forecast used to be quite different from the “actual,” so the results are always difficult to foresee.

How to trade on the US NFP release?

If NFP is higher than expected, the USD will rise. If NFP is lower than expected, the USD will fall. The unemployment rate situation is the opposite: the lower the indicator, the better for the US currency.