U.S. Nonfarm Payrolls and Unemployment Rate

The U.S. Nonfarm Payrolls and Unemployment Rate are out this coming Friday, September 1, 2017, at 13:30 UK Time (GMT+1), and are expected to cause significant volatility in the markets.
An economic indicator that tends to trigger sharp market movements in the minutes leading up to its release and afterwards, the NFP is released by the U.S. Department of Labor on the first Friday of each month, outlining changes in the number of employees, excluding farm workers and those employed by the government, non-profit organisations and private households.

What to expect this month:

The recent positive trend in NFP releases continued in July with 209,000 new positions added which helped reduce the unemployment rate to 4.3%. NFP for August, per market consensus, is expected to come in at 180,000, underscoring a strong US Labour Market. The markets will also be closely watching the Average Hourly Earnings release with many hoping to see an improvement on the previous two readings of 2.5%.

Average earnings need to increase for consumer spending to rise that will then help increase inflationary pressure. Analysis indicates that the market-implied probability that the Fed raises rates by year-end is around 30%. Fed funds futures are not fully pricing in another 0.25% rate hike until September 2018.

If we see a significantly bad NFP release of <140K, coupled with an Unemployment Rate >4.4%, the markets will see USD come under downward pressure. A strong NFP release of >210K, with the Unemployment Rate below 4.3%, will likely result in USD strengthening.As always, it will be important to note any revision from the previous month (209K) as this will impact market sentiment regardless of the current release.