Event Guide: U.S. Non-Farm Payrolls Report for July 2023

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Are we about to see another upside NFP surprise?

Or will the U.S. jobs figure fall short like it did last time?

Here’s what you need to know if you plan on trading this top-tier event:

Event in Focus:

U.S. Monthly Employment Situation Summary from the U.S. government for July 2023

When Will it Be Released:

August 4, Friday: 12:30 pm GMT

Use our Forex Market Hours tool to convert GMT to your local time zone.


  • U.S. Non-Farm Payrolls Change m/m: +203K forecast vs. +209K previous
  • U.S. Average Hourly Earnings m/m: +0.3% m/m forecast vs. 0.4% m/m previous
  • U.S. Unemployment Rate: 3.6% forecast vs. 3.6% previous

Another slight slowdown in hiring activity is expected for the month of July, as the NFP reading could come in at 203K versus the earlier 209K gain. This should be enough to keep the jobless rate unchanged at 3.6%.

Wage growth is also expected to tick lower, with the average earnings index easing from the earlier 0.4% increase to a 0.3% uptick for the previous month.

Relevant U.S. Data Since the Last U.S. Non-Farm Payrolls Report:

🟢 Arguments for Strong Jobs Update / Bullish USD

  • S&P Global final manufacturing PMI for July revealed that employment growth quickened amid stronger optimism, as ” job creation stemmed from projections of greater client demand over the coming months”
  • July CB consumer confidence index chalked up back-to-back gains, as the reading rose from 110.1 to 117.0 vs. 112.1 forecast with consumers’ assessing that labor market conditions will remain favorable
  • Preliminary UoM consumer sentiment index rose to a two-year high of 72.6 in July on strengthening jobs market
  • Weekly initial jobless claims figures have been coming in better than expected in three out of the last four weeks
  • ADP National Employment Report for July: 324K (210K forecast; 455K previous)

🔴 Arguments for Weak Jobs Update / Bearish USD

  • JOLTS job openings slowed from downgraded 9.62 million in May to 9.58 million in June, indicating fewer hiring opportunities vs. estimated 9.61 million figure
  • July ISM manufacturing PMI came in below estimates, with the employment component posting another monthly drop from 48.1 to 44.4 to reflect a sharper decline

*Note: ADP non-farm employment change, ISM services PMI, and Challenger job cuts figures have yet to be released as of this writing.

Previous Releases and Risk Environment Influence on USD

July 7, 2023

Action / results: 

The June NFP report came in below consensus, as the U.S. economy added only 209K jobs for the month versus the estimated 224K gain. In addition, the May reading was downgraded to show a smaller 306K gain in hiring versus the initially reported 339K increase.

Still, the unemployment rate dipped from 3.7% to 3.6% as the labor force participation rate held steady at 62.6% for the fourth consecutive month. Also, the average hourly earnings index beat expectations with a 0.4% uptick while the previous reading enjoyed an upgrade to 0.4% as well.

Dollar bulls who had been charging upon seeing upbeat U.S. leading indicators throughout the week were disappointed to see weak headline readings, as these dashed hopes of more Fed rate hikes past July.

This likely reminded market watchers that the FOMC minutes printed earlier in the week suggested that some policymakers are leaning towards a slower pace of tightening.

Risk environment and intermarket behaviors: 

Concerns about high borrowing costs spurring a potential global recession kept risk-taking in check early in the week, although the dollar was also on shaky footing after Friday’s downbeat core PCE price index.

Weaker than expected manufacturing PMI figures from the U.S. and China also kept a lid on risk rallies, before the FOMC minutes triggered a larger flight to safety on Wednesday.

Higher-yielding assets like commodities and equities managed to recoup some losses late on Friday, as the downbeat NFP cast some doubts on whether or not the Fed can maintain its pace of tightening.

June 2, 2023

Action / results: 

The NFP reading for May beat market expectations yet again, as the U.S. economy added 339K jobs versus the estimated 180K increase.

Surprisingly, the jobless rate jumped from 3.4% to 3.7% versus the 3.5% consensus, but underlying components revealed that this was mostly due to higher labor force participation. In other words, more folks are returning to the labor market to resume their job hunt!

Average hourly earnings reflected a slightly slower pace of wage growth than expected, as the reading came in at 0.3% versus the 0.4% estimate.

Even so, the Greenback caught a big bullish wave upon seeing the numbers, as dollar bulls revived hopes for a June hike instead of a pause. This post-NFP rally was so strong that the dollar pared losses from the first half of the week when debt ceiling troubles were front and center.

Risk environment and intermarket behaviors: 

Market participants were heavily focused on U.S. debt ceiling developments for the most part of the shortened trading week, following updates that lawmakers reached a tentative deal over the weekend.

Speeches from a few Fed officials suggesting a pause in June, along with stronger than expected Chinese Caixin manufacturing PMI, lifted risk appetite midweek and dragged the lower-yielding dollar lower.

The tide turned in favor of the safe-haven currency when the upbeat NFP not only boosted rate hike prospects but also revived global recession jitters.

Price action probabilities

Risk sentiment probabilities:

Mixed PMI reports from China spurred a bit of risk-taking earlier this week, as traders remained focused on the possibility of more stimulus from the government.

In addition, expectations of a less-aggressive pace of tightening among major central banks were underscored when the RBA decided to keep rates on hold during their policy decision on Tuesday.

But sentiment seems to have soured today after Fitch downgraded the U.S.’s long-term ratings to ‘AA+’ from ‘AAA.’ This sentiment may hold through Friday with more PMI updates on Thursday likely to signal slowing economic conditions.

USD scenarios

Base Case:

Leading jobs indicators seem to be tilted in favor of another upside NFP report, which might give the dollar a double boost on the prospect of higher U.S. interest rates and overall risk aversion.

After all, a strong jobs figure could remind traders that Powell kept the door open for future hikes during their latest FOMC announcement, citing that the September meeting is still a live one.

In this case, the dollar could be poised for a rally against higher-yielding commodity currencies, particularly AUD which might still be reeling from the cautious RBA decision earlier on.

Going long USD against the euro could also provide profit opportunities, as the ECB surprisingly shifted to a less hawkish stance in last week’s rate statement.

Keep in mind that the Greenback is already finding bids this week, so an extended move higher going into Friday’s numbers raises the risk of a “buy-the-rumor, sell-the-news” scenario playing out, or potentially limit an upside reaction if the NFP report comes in positive.

Also, keep an eye on the average earnings numbers, which may gain more focus and weight on USD sentiment if the net jobs change and unemployment numbers come relatively inline with expectations.

Alternative Scenario:

If the July NFP falls short of estimates again, this would mark back-to-back months of disappointing jobs figures, possibly leading traders to be wary of a prolonged labor market slowdown.

This might also be a point in favor of the Fed sitting on its hands in the next policy decision, which might actually be positive for risk-taking. In this scenario, the Greenback could suffer a one-two punch from dovish Fed expectations and easing recession woes, especially if the current uptrend in the U.S. Dollar Index continues into Friday.

Watch out for possible short USD plays against GBP or JPY, as the latter is slowly veering away from its ultra-easy policy stance while the former might retain their hawkish stance in their policy decision this week.


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About the Author: Webbey Team

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