The US Bureau of Labor Statistics (BLS) released the Nonfarm Payrolls (NFP) report for April on Friday, showing a job gain of 177,000 in the United States (US). This was a slight decrease from the revised March figure of 185,000 and exceeded the analysts’ expectations of 130,000.Other key details from the employment report included the Unemployment Rate remaining steady at 4.2%, as predicted, and the Labor Force Participation Rate rising to 62.6% from 62.5%. Additionally, annual wage inflation, measured by the change in the Average Hourly Earnings, stayed at 3.8%.”The BLS noted in a press release that employment data for February and March were revised downwards, with a total of 58,000 jobs lower than initially reported. As a result of this news, the US Dollar Index (DXY) initially rose slightly but later lost 0.2% on the day to reach 100.00.”The upcoming April Nonfarm Payrolls data, set to be released by the US Bureau of Labor Statistics (BLS) at 12:30 GMT on Friday, is highly anticipated as it could influence the Federal Reserve’s (Fed) decision to cut interest rates next month. Trade deals with key Asian partners and an unexpected contraction in the US economy in the first quarter have increased the importance of this data, which could also impact the performance of the US Dollar (USD) in the short term.President Donald Trump stated in a NewsNation Town Hall interview on Thursday that the US is currently working on trade deals with India, South Korea, Japan, and China, which could improve economic conditions and potentially influence the Fed’s interest rate decision.Economists are expecting the Nonfarm Payrolls to show a job gain of 130,000 in April, following last month’s impressive 228,000 reading. At the same time, the Unemployment Rate is predicted to hold steady at 4.2%. The closely-watched measure of wage inflation, Average Hourly Earnings (AHE), is forecast to show a year-on-year increase of 3.9% in April, slightly higher than the 3.8% reported in March.TD Securities analysts believe that despite fears of trade tensions affecting job growth, the April employment report will likely show little change as the Nonfarm Payrolls return to their usual trend after a large increase in March. They also predict that the Unemployment Rate will remain at 4.2% and that wage growth will slow down slightly, with a 0.2% increase compared to last month’s 0.3% increase.In the meantime, the US Dollar has been recovering against its major currency rivals due to reduced trade tensions, which have improved market sentiment and offset the negative impact of this week’s US economic data releases. On Wednesday, the first estimate of the annualized US GDP for the first quarter showed a surprise 0.3% decline largely due to an increase in imports, while the core Personal Consumption Expenditures (PCE) Price Index, which excludes food and energy prices, rose by 2.6% in March compared to February’s 3% increase. Similarly, Wednesday’s ADP report revealed that private sector payrolls in the US had risen by only 62,000 in April, significantly lower than the 147,000 recorded in March and analysts’ prediction of 108,000.All these developments have strengthened the case for the Fed cutting rates by 25 basis points (bps) in their meeting next month, although the market is already expecting rates to remain the same. The market’s four predicted rate cuts this year are an indication that the Fed is more concerned about supporting economic growth than controlling inflation.Fed policymakers worried about the state of the job market last month, with Minneapolis Fed President Neel Kashkari expressing concerns about potential layoffs linked to trade uncertainty. Fed Governor Christopher Waller told Bloomberg that he would not be surprised if more layoffs occur and that a good way to offset tariff expenses is to cut payroll numbers in the US.The April jobs data will be watched very closely to gain insights into the current state of the US job market and any indications of what the Fed’s future decisions might include. If the reading is below 100,000, expectations for a rate cut in June will triple, causing the US Dollar to depreciate as Gold appears to be set to rise again. In case of an unexpectedly high reading above 200,000, Gold could continue its two-month downward trend as the data would show that a June rate cut is unlikely. Dhwani Mehta, Tradeonary talks about trading strategiesCheck out various video on Forex Trading Services.
