NFP Preview: Will We See the WORST Jobs Report of 2025?

NFP Key Points

• NFP report expectations: +106K jobs, +0.3% m/m earnings, unemployment at 4.2%.
• The lack of leading indicators for this month’s jobs report increases the uncertainty around the release and could lead to elevated volatility.
• The US Dollar Index (DXY) has risen for six straight days, raising the risks of a profit-taking pullback unless the jobs report is particularly strong.

When is the July NFP Report?

The July NFP report will be released on Friday, August 1, at 8:30 ET.

NFP Report Expectations

Traders and economists expect the NFP report to show that the US created 106K net new jobs, with average hourly earnings rising 0.3% m/m (3.8% y/y) and the U3 unemployment rate ticking up to 4.2%.

NFP Overview

Last month, we highlighted the gradual but persistent deterioration in the labor market, noting that it could present downside risks to the June NFP report. As it turns out, that report came in a bit above expectations, flattered by government hiring and seasonal adjustments. The key question for traders this month is whether the NFP report will show delayed deterioration as those temporary measures fade or whether the labor market bounced back enough to smooth over any mid-year slowdown in hiring.

When it comes to this month’s jobs report, expectations are for +106K jobs, with the unemployment rate expected to tick up to 4.2%. One key area to watch will be the average hourly earnings measure, which is expected to come in at 0.3% m/m, up a tick from last month’s reading:

 

Source: StoneX

Crucially, traders now expect just about one-and-a-half 25bps rate cuts from the Federal Reserve this year, after FOMC Chairman Powell’s press conference called into question the odds of a September interest rate cut amidst ongoing concern about tariff-driven inflation. With concerns about both the employment and inflation sides of the Fed’s dual mandate, a weak jobs report could push the central bank off the sidelines to cut interest rates.

NFP Forecast

As regular readers know, we focus on four historically reliable leading indicators to help handicap each month’s NFP report…but given the vagaries of the calendar this month, we only have two in advance:

• The ADP Employment report rose 104K jobs, up from last month’s upwardly revised -23K print.
• The 4-week moving average of initial unemployment claims ticked down to 221K from last month’s 240K+ reading.

With only half of the usual leading indicators available, we’ll abstain from providing a model-based forecast for this month’s jobs report.

Regardless, the month-to-month fluctuations in this report are notoriously difficult to predict, so we wouldn’t put too much stock into any forecasts (including ours). As always, the other aspects of the release, prominently including the closely-watched average hourly earnings figure which came in at 0.2% m/m in the most recent NFP report.

Potential NFP Market Reaction

	Wages < 0.2% m/m	Wages 0.2-0.4% m/m	Wages > 0.4% m/m
< 80K jobs	Bearish USD	Bearish USD	Slightly Bearish USD
80-130K jobs	Slightly Bearish USD	Slightly Bearish USD	Neutral USD
> 130K jobs	Neutral USD	Slightly Bullish USD	Bullish USD

As I outline below, the US Dollar Index (DXY) is in a completely different situation than it was last month, reversing from 3+ year lows to a two-month high. This tilts the odds toward a bearish reaction in the greenback unless the jobs report is meaningfully stronger than anticipated.

US Dollar Technical Analysis – DXY Daily Chart

Source: TradingView, StoneX

As the chart above shows, the US Dollar Index (DXY) broke above its bearish trend line, retested it from the topside, then broke above previous resistance in the 99.25, bringing the year-to-date downtrend to an end.

In the short-term, DXY has risen for six straight days, leaving the 14-day RSI more overbought than it’s been since January and raising the risks of a profit-taking pullback unless the jobs report is particularly strong. To the downside, previous-resistance-turned-support at 99.25 will be the key level to watch, with the medium-term outlook remaining generally constructive above that zone.

If we see a strong jobs report that puts any Fed rate cuts this year in doubt, there is little in the way of resistance for the US Dollar Index until well above the 101.00 handle.

-- Written by Matt Weller, Global Head of Research

Follow Matt on Twitter: @MWellerFX