Strongest Nonfarm Payrolls in 10 months sends US interest rates higher
March's Nonfarm Payrolls surge past expectations, propelling US Treasury yields near year-to-date highs. With interest rate cuts less likely, the US dollar strengthened against major currencies.
Data current as of 4/5/2024
Key points
Nonfarm Payrolls hit 303k in March
In another robust display of economic health, the US Nonfarm Payroll figures for March exceeded expectations, with 303k jobs added compared to the anticipated 200k. This significant jump marks the strongest employment growth in the past 10 months, offering a positive signal for the US economy. Such data points are critical for forex traders as they indicate potential shifts in fiscal policy and economic momentum.
US Treasury yields near year-to-date highs
US 10-Year Treasury yields are hovering near their highest levels since November 2023, reflecting investor confidence and expectations of economic stability. Higher yields often suggest a stronger dollar as they attract investors looking for secure returns, impacting currency valuations and forex trading strategies.
Fed could cut interest rates less than expected
Continued strong US data and rising yields are causing a decreasing likelihood of the Federal Reserve cutting interest rates to below 4% in 2024. Futures traders at the CME were anticipating a 50% chance of sub-4% rates by December when the year began - now those probabilities have fallen to 0%. This change in market sentiment signals a reassessment of economic conditions potentially influencing USD strength and forex market dynamics.
Growing chance of no interest rate cuts in 2024
Fed Funds futures now show a 2.0% probability of interest rates ending the year unchanged at 5.25-5.5%. While seemingly insignificant, this percentage has grown from 0% at the start of the year, and the most likely number of 25bps cuts has shifted from 6-7 to now only 2-3. This evolving perspective hints at a stable, perhaps even robust, economic outlook for the near term, reshaping forex strategies as traders consider the implications of sustained rates on currency values and exchange rates.
US dollar trading near highs in several forex pairs
The US dollar is demonstrating its resilience, trading within 100 pips of its year-to-date highs against major currencies such as the EUR, GBP, CHF, and JPY. This position underscores the USD's dominance in the forex market, influenced by factors like treasury yields and interest rate expectations, and bolstered by the recent employment data.
How to trade US dollar
- Open an account to get started, or practice on a demo account
- Choose your forex trading platform
- Open, monitor, and close positions on USD pairs
Trading forex requires an account with a forex broker like IG. Many traders watch major forex pairs like GBP/USD and USD/JPY for potential opportunities based on economic events such as inflation releases or interest rate decisions. Economic events can produce more volatility for forex pairs, which can mean greater potential profits and losses as risks can increase at these times.
You can help develop your forex trading strategies using resources like IG’s YouTube channel. Our curated playlists can help you stay up to date on current markets and understanding key terms. Once your strategy is developed, you can follow the above steps to opening an account and getting started trading forex.
Your profit or loss is calculated according to your full position size. Leverage will magnify both your profits and losses. It’s important to manage your risks carefully as losses can exceed your deposit. Ensure you understand the risks and benefits associated with trading leveraged products before you start trading with them. Trade using money you’re comfortable losing.
This information has been prepared by IG, a trading name of IG US LLC. This material does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. You should not treat any opinion expressed in this material as a specific inducement to make any investment or follow any strategy, but only as an expression of opinion. This material does not consider your investment objectives, financial situation or needs and is not intended as recommendations appropriate for you. No representation or warranty is given as to the accuracy or completeness of the above information. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. See our Summary Conflicts Policy, available on our website.
Live prices on the most popular forex markets
See more forex live prices
Prices above are subject to our website terms and agreements. Prices are indicative only
