US Employment Data | Trade on the USD

Jarratt Davis

Special Consultant to the FPA
US Employment data release will take place at 1.30pm BST. This release always has the capacity to cause massive volatility in financial markets.

Given there are three separate and important metrics, there can be moves in both directions if one figure comes out better while another figure worse. We will be looking for matching deviations across all three metrics in order to prompt a trade on the USD. If there are positive deviations on all three then we will look to buy the USD and if there are negative deviations across all three then we will look to sell USD.


Released monthly by the Bureau of Labor Statistics, this data release shows three key employment metrics: Non-Farm Employment Change, also known as Non-Farm Payrolls, measures the change in the number of employed people during the previous month, excluding the farming industry. This is vital economic data released shortly after the month ends. The combination of importance and earliness makes for hefty market impacts. Job creation is a leading indicator of consumer spending which accounts for a majority of overall economic activity. The Unemployment Rate measures the percentage of the total work force that is unemployed and actively seeking employment during the previous month. Although it’s generally viewed as a lagging indicator, the number of unemployed people is an important signal of overall economic health because consumer spending is highly correlated with labour-market conditions. Unemployment is also a major consideration for those steering the country’s monetary policy. Average Hourly Earnings measures the change in the price businesses pay for labour, excluding the farming industry. This is a leading indicator of consumer inflation because when businesses pay more for labor the higher costs are usually passed on to the consumer.


The USD has remained pressured over recent weeks as expectations for future rate hikes continue to be pushed further back. At their April meeting the Fed failed to give any meaningful indication of a hike at their June meeting, as such Futures markets are now pricing in only a 9% chance of a hike on June 15, with expectations for even a single hike this year once again declining to around 50%. The Fed’s main concern remains low inflation with most Fed members overall satisfied with the state of the US labour market. Nevertheless employment data remains highly influential to the Fed’s decision making process, especially Average Weekly Earnings data which as an underlying factor for inflation has became an increasingly important data point.

Payrolls are expected to rise by 203K for April, below last months reading of 215K yet still above the significant 200K level. The unemployment rate is expected to hold at 5.0%. Particular focus will be paid to hourly earnings given its influence on inflation, this is expected to rise by 0.3%.

This week’s ADP report missed expectations printing at 156K, which is a discouraging sign for the government release.

US Employment figures event has been covered in weekly risk events video here.

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