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Non-Farm Payrolls Preview: Potential Gold and USD volatility 

April 04,2024 08:04:13

What to expect from the upcoming NFP

  • Consensus sees headline NFP at a more trend-like 200,000 in March. This would be down from the 275,000 in February and the 12-month average of 229,000. Watch for revisions again, after the big negative adjustments in January and February.
  • Average hourly earnings are expected to tick up to 0.3% from 0.1%.
  • The unemployment rate is predicted to stay at 3.9%.
  • Surging gold and USD could react the strongest to a miss more than a beat.

Some weakness in the headline NFP print should help make the case for rate cuts in the coming months. A spike in the jobless rate would also give the Fed another nudge towards to a June rate cut.Some weakness in the headline NFP print should help make the case for rate cuts in the coming months. A spike in the jobless rate would also give the Fed another nudge towards to a June rate cut.

How does this affect instruments?

Gold:  In a scenario where we see weakness in headline NFP print, or an increase in unemployment rate, record highs in gold could be consolidated with bugs eyeing fresh peaks towards $2,300. Initial support sits at $2,222, with a minor Fibonacci retracement level at the key psychological level around $2,200.

History suggests higher gold prices are usually correlated to a softer USD so recent gold strength and a firm dollar seem odd. Something may have to give!

Dollar: After breaking to new cycle highs recently above 105, the dollar would turn lower on a cooler report. The resistance / support is the mid-February and previous year-to-date top at 104.97/96.

10-year US Treasury: The 10-year US Treasury yield is worth monitoring closely. This is a global proxy for borrowing costs and influences price action in numerous markets. It recently burst through long-term resistance at 4.33%, with the next level above at 4.40%.

EUR/USD: A strong report would push yields and the USD higher and see EUR/USD break down towards 1.07 and USD/JPY potentially through 152. Gold could struggle to sustain its recent rally.


The US non-farm payrolls report wraps up another busy week in markets when it is released on Friday. The headline figure represents the total number of paid US workers of any business and accounts for around 80% of workers who make up the entire GDP of the US. The data is a monthly release and arguably the most watched economic report for traders and investors.

A less robust labour market report is expected and is the key risk, as highlighted by Fed Chair Powell at the recent FOMC press conference. Aside from the volatility around the headline reading, we note there were 167,000 negative revisions in January and February. This effectively left the net headline figure with just over 100,000 job gains in March. Wage growth is set to grow at a more normal monthly pace following the very weak February print (0.1%).

Other labour market data

Regional Fed surveys, manufacturing sector PMI employment indices and the main US hiring intention survey have been mixed recently, with softer conditions seen in the months ahead modestly improving on some measures. The downward trend in JOLTs vacancies continued, with the quits ratio marginally encouraging as it implies the labour market is gradually balancing. That figure acts as a leading indicator for the employment cost index, the best measure of labour costs. It suggests easing wage growth to a pace compatible with the Fed’s 2% inflation target. Wednesday’s ADP private employment report will be watched, but this is notoriously poor at predicting NFP.

Implications for Fed policy

The March FOMC meeting saw policymakers adjust their language to acknowledge the recent strengthening in data, stating that “Job gains have remained strong and the unemployment rate low” [1].  The median jobless rate forecast was adjusted slightly to 4.0% in 2024, 4.1% in 2025, 4.0 % in 2026, and 4.1% over the long run, from 4.1% respectively across all timeframes [2].

Chair Powell said at that meeting that strong job numbers may not be inflationary so would not necessarily derail rate cuts. More recently, he has said the Fed is in no rush to ease policy. Futures now give a first 25bp rate reduction in June a 64% chance. But having priced in over 80bps of 2024 Fed easing at the start of this week, traders now price under 70bps. This is less than the three 25bp rate cuts seen in the Fed’s March median dot plot. Another strong report would mean markets start pricing in just two rate reductions this year.


  1. “Federal Reserve issues FOMC statement – Board of Governors of the Federal Reserve System” Accessed 3 March 2024
  2. “U.S. FOMC Meeting (March 19-20, 2024) – TD Economics” Accessed 3 March 2024

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