Non-farm payrolls preview: will NFP spark a dollar sell-off?

How will Friday’s US jobs report shape the dollar going forward?

The jobs report brings volatility

Friday heralds the return of the US jobs report in what will almost certainly be one of the most volatile periods of the week. That volatility is largely evident each time around, with the various elements of the report bringing some form of surprise for the most part. For markets, there is always a focus on what impact these figures will make on the Federal Reserve (Fed) thinking, with the Reuters probability distribution showing a 70% chance of a rate cut at the 30 October meeting. Should we see further weakness in the US economic picture, it would be expected to manifest itself in a greater expectation of a rate cut and a lower US dollar. Similarly, should we see signs of strength on Friday, that 70% figure would likely drop to the benefit of the greenback.

Non-farm payrolls numbers

Markets will typically respond to the headline non-farm payroll (NFP) figure, with markets largely expecting to see an improved figure compared with the 130,000 seen a month ago. For anyone looking to the ADP for confirmation of such a move wont have found it, with that number coming in at 135,000, alongside a sharp downward revision to the prior figure of 195,000 (down to 157,000). Market expectations point towards a figure close to 140,000-145,000 this time around.

Average hourly earnings

Beyond that initial reaction to the NFP figure, markets will look to the average hourly earnings as a gauge of business confidence and potential future inflation. With the US economy approaching full employment, it makes sense that firms find it difficult to hire and thus pay better wages. Wages are a cost to firms, and thus higher wages will in turn manifest themselves in higher prices and inflation. Keep an eye out for average earnings, with the prior figure of 0.4% expected to drop to 0.3%.


Unemployment is usually a headline grabber, yet the slow and steady nature of this indicator means that the market reaction can often be muted. Markets are looking for a possible drop to 3.6% following the rate of 3.7% seen over the past three months.

Chart to watch

The dollar has been on the rise of late, with this week seeing the dollar index hit the highest level in over two years on Tuesday. However, that rally is fading as we head towards the end of the week. With an ascending trendline potentially limiting upside, there is a good chance we could see the dollar index bull back once again. Much of that will be down to whether we do see a weak set of numbers to ramp up rate hike expectations from the Fed.

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Start trading forex today

Trade the largest and most volatile financial market in the world.

  • Spreads start at just 0.6 points on EUR/USD
  • Analyse market movements with our essential selection of charts
  • Speculate from a range of platforms, including on mobile

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.


Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.