Wondering what’s up in markets? With the stage now set for the NFP report, the markets are preparing for a potential USD rally. Whether the actual release will provide enough steam for the buck to rise further remains to be seen. Meanwhile, let’s look at the figures!
In December 2024, the total nonfarm payroll employment reading showed a 256,000 increase. According to data from the US Bureau of Labour Statistics, the unemployment rate was little changed at 4.1%. Healthcare, government, and social assistance were the economic sectors adding the most jobs. Retail trade also strengthened in December, following November’s job loss.
Arguably working against the Fed’s plans to trim interest rates and significantly above analysts’ estimate of 164,000, the upbeat NFP figure provided plenty of support to the US Dollar, which strengthened against most of its major peers.
But what lies ahead?
On Wednesday, payroll processor ADP released its National Employment Report which stated that in January 2025 the nonfarming sector expanded by 183,000 jobs. In light of this number, which typically serves as a basis for economists’ predictions of the actual NFP data due on Friday, 7 February, estimates revolve around 169,000.
One of the key details to keep an eye on will be the hourly earnings, which have generally steadied, keeping within the 3.9 – 4% range for the past five months. Even a slight deviation from this level might force the Fed’s hand, having negative implications for inflation and the Fed’s policy.
Having said that, the average hourly earnings are expected to climb by 0.3% m/m in January, in line with the previous month’s reading. This gauge serves as a barometer for inflationary pressures, and with the labour market remaining robust, any uptick in inflation could potentially be seen as a good omen. At the same time, the unemployment rate is expected to remain unchanged at 4.1%.
NFP implications on the Forex market
Ahead of data, the most widely traded Forex pair, EURUSD, saw a correction to 1.0360 before rising slightly above 1.03830, just below the 10-day MA during Thursday’s early North American session. The USD’s recovery may be linked to traders’ reaction in anticipation of the official NFP release.
As highlighted earlier, the NFP will also be pivotal to the Federal Reserve’s inflation outlook, influencing market speculation about the length of time for which the Fed will keep interest rates in the 4.25% – 4.50% ballpark.
Last week, Fed Chair Powell said that the Fed would only make monetary policy changes after seeing “real progress in inflation or at least some weakness in the labour market.” The Fed’s stance remains uncertain as policymakers are struggling to foresee the impact of President Donald Trump’s punitive tariff policy.
On Thursday, the US Department of Labor reported above-expectations Initial Jobless Claims for the week ending January 31. Individuals claiming unemployment benefits for the first time rose to 219,000, more than 213,000 as expected and the previous reading of 208,000.
USDCAD traded flat on Thursday, in the area of 1.43135 and below. The loonie has fought to escape the 21-year low territory, but it remains in the stronghold of familiar consolidation against the buck. Although the application of the Trumpist tariff policy against Canada has been pushed further by 30 days, the outlook remains tense.
In other news, Canada’s Ivey PMI for January contracted on a seasonally adjusted basis, tumbling to a 4-year low at 47.1. On the employment front, Canada is expected to add fewer jobs in January – 25,000 versus 90,900.
What’s in it for safe-haven silver?
Silver traded lower on Thursday after reaching a multi-month high at 32.412, before pulling back to 32.198. Although the broader uptrend appears to be intact, a correction may also be due near-term.
Increased volatility is to be expected as traders await more impetus from the NFP figure.
Overall silver prices have risen by 11.03% since the beginning of 2025. The gold/silver ratio, which indicates the number of silver ounces needed for one ounce of gold, held steady at 89.05 on Thursday, up from 88.76 a day prior. Will you buy or sell silver CFDs with TibiGlobe?
*Note: All prices referenced in this article are the daily chart rates available on Thursday on TibiGlobe’s CFD trading platform.
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