Non-farm Payrolls Prints at +428k v/s +391k Forecast, Unemployment at 3.6%

Non-farm Payrolls Talking Points:

It’s been a very busy week across global markets with considerable focus around the Wednesday FOMC rate decision.
Non-farm Payrolls for the month of April is released just two days after that rate decision, and following this morning’s data, there’s a slew of Fed-speakers on the calendar for this afternoon. So it could remain a very busy day as we head into the weekend of what’s been a big outing for markets.

Updated 8:44 AM ET

Initial take on this data outlay is that it wasn’t too bad. The Fed did appear to get a bit of help with Average Hourly Earnings coming in a bit under the expectation, printing at 5.5% versus last month’s 5.6% release. This speaks to inflation and given the Fed’s fight against higher prices, any help there is likely welcomed. And, it seems unlikely that a single 25 basis point hike from March would’ve made that difference here nor would this week’s 50 basis point hike have had impact on April data.

But – perhaps the Fed’s messaging has started to take a toll? And, similar to rates markets, labor markets are proactively responding to the Fed’s anticipate shift? This is all theoretical, by the way, because Average Hourly Earnings is still at 5.5%, well beyond the Fed’s 2% ‘Average Inflation Target’ and this is unlikely to mean much just yet. But, most big trends have small beginnings so, the Fed may have some hope here. But we’ll hear about that later today as we have a number of Fed speakers on the calendar, including John Williams giving a speech at 9:15 AM ET.

Outside of Average Hourly Earnings, the headline number came out a little higher than expected at +428k versus the +391k expected. The unemployment rate was a tick higher at 3.6% versus the forecast of 3.5% but, that’s inline with last month’s 3.6% print. This has also been a focal point of the Fed, focusing on slack in the labor market and this unemployment read stayed flat from last month, indicating that there hasn’t been much progress there.

Market Responses

This is a bit more of a loaded equation given how everything transpired this week. The initial response in the USD had been weakness with price continuing to pullback after this morning’s fresh 19-year-high. There doesn’t appear to be much in this report that could serve as damaging to that bullish trend. But, given the veracity of the move this week, which has been pumping higher in a fairly aggressive manner since yesterday morning, and there could be some more profit-taking to be seen ahead of the weekend.

This can open the door for support visits down to the 103.00 handle, which has seen both support and resistance during this recent run. This remains an area of interest in the US Dollar.

US Dollar 30-Minute Price Chart

Released 8:31 AM ET

This morning brings the release of Non-farm Payrolls for the month of April and, after what’s already been a very eventful week, this data point is likely going to garner considerable attention.

The Fed has just hiked rates by 50 basis points for the first time since the year 2000. This, of course, is in effort of reducing the 40-year highs that continue to show with inflation data, and a large portion of that inflationary focus is on wage growth, which will be touched on in this morning’s NFP release.

The expectation for this morning’s release was for the US to have added +391k jobs in the month of April, along with an unemployment rate at 3.5% v/s a prior print of 3.6%. But – on that wage growth front, the expectation is actually for some softening – to 5.5% versus last month’s 5.6%.

While .1% is a nominal difference, seeing some reduction here would likely bring a sense of relief for the Fed as they’re faced with a number of options that all contain some considerable downside potential.

Updating…

Ahead of the release, the US Dollar remains very near recently-established 19-year highs. Initially the Dollar dropped on the back of the FOMC announcement. But, it came raging back yesterday as buyers bid the dip and prices broke through resistance to set a fresh high.