US NFP Preview: Nonfarm Payrolls set for another moderate increase in January
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The highly-anticipated Nonfarm Payrolls (NFP) data from the United States (US) is due on Friday at 13:30 GMT. The US labor market report will be published by the Bureau of Labor Statistics (BLS) and is expected to have a significant influence on the US Dollar (USD) price direction. The Nonfarm Payrolls report is expected to show that the US economy added 180,000 jobs in the first month of 2024, down from a whopping 216,000 jobs created in December. The unemployment rate is seen ticking up from 3.7% in December to 3.8% in the reported period. Average Hourly Earnings are expected to rise 4.1% in the year through January, at the same pace as seen in December. The US labor market data holds the key to gauging the timing and the pace of the US Federal Reserve (Fed) interest rate cut this year, especially after the US central bank pushed back expectations of a March rate cut following the conclusion of its two-day policy meeting on Wednesday. The Fed left its benchmark interest rates unchanged at the 5.25% to 5.50% range for the fourth consecutive meeting on Wednesday, in line with the market expectations. The statement, however, was read as slightly hawkish, as it stated, "until it has increased confidence that inflation is moving sustainably toward 2 percent, the Committee does not anticipate it will be appropriate to lower the target range for the federal funds rate." The probability of a March Fed rate fell steeply from about 50% at the start of the week to 35% after the Fed policy announcements, according to CME Group’s FedWatch Tool. Meanwhile, markets now see a 90% chance of the Fed lowering borrowing costs in May.
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