Non farm payrolls and US unemployment preview

Due to the upcoming 4th July holiday in the US, the Non-Farm Payrolls (NFP) and Unemployment Rate data will be released on Thursday morning instead of Friday.

As usual, Wednesday’s ADP employment report provided a preliminary glimpse into what might generally be expected for Thursday’s major NFP data release.

The ADP numbers showed that businesses added 237,000 jobs in the month of June, handily beating the consensus estimate of 219,000. Additionally, May’s ADP numbers were revised up to 203,000 from the previously reported 201,000.

Although ADP data often differs markedly from the US Department of Labor’s NFP data, the slightly earlier ADP report provides some leading indication of the employment trends underlying the US economy.

Wednesday’s solid ADP numbers shows that the job picture remains exceptionally strong in the US. This helped prompt an initial surge in the US dollar against other major currencies on Wednesday, as gold continued to slump, crude oil plunged, and major global equity indices saw a resurgence on renewed hopes for a Greece deal.

For Thursday’s NFP report, the consensus estimate is 231,000 jobs added in June. In contrast, last month’s NFP numbers for May were estimated at 222,000, while the actual figure was a full 280,000, far exceeding estimates.

As for the unemployment rate, also to be released on Thursday, the consensus estimate is 5.4%. Last month’s data showed a 5.5% unemployment rate on an initially estimated 5.4% rate, slightly worse than expected.

Although much of the recently rosy employment picture has been priced into the rising US dollar after the ADP report, Thursday’s market reaction to the upcoming NFP numbers should prove to be significant.

If the data generally meets or exceeds expectations, the dollar could potentially continue its run, placing further pressure on gold and crude oil. This could also lead to a further retreat for GBP/USD and EUR/USD, and a corresponding rebound for USD/JPY.