The upcoming Non-Farm Payrolls (NFP) report will be released tomorrow, the same as last month’s consensus expectation of 110K.
As a reminder, the July NFP release shook markets with another positive surprise, coming in 37K stronger than the 110K Expected (+ 147K). Markets are now awaiting to see if the US can once again surprise with more upside on its Labor data.
For those newer to trading, the NFP is one of the most market-moving data releases globally. It offers insight into the health of the US labor market for the just—concluded month, with the Unemployment Rate also published at the same time.
I strongly invite you to look at our last month’s July Non-Farm Payrolls preview to learn more about why NFP matters so much for Markets (most of the info is in the introductory section).
Read More: NZDUSD tests the edge of its range as USD buying pressure builds
Market moving flows as July concludes
We are concluding a strongly volatile July trading, with powerful disruptions to what was the 2025 most significant trend of US Dollar selling:
After hitting 96.40 lows on its Dollar Index (DXY), the Greenback made its way back to the 100.00 level just today after Core PCE came in stronger once again (0.3% m/m vs. 0.2% estimate).
The key question for the upcoming month is: Will the US keep beating expectations as they have done since 2024?
The answer to this will help to assess when the first FOMC rate cut of the year will take place.
All participants are getting ready for the session close which brings the usually volatile Month-End flows.
Let’s now explore:
- Seasonal trends for August payrolls
- A small look at the Dollar Index
- What potential reactions traders might expect from this key report
US Data releasing tomorrow morning, including NFP and ISM PMIs
Seasonal trends for the August NFP release
August NFP (where Markets learn more about the prior month’s data) averages around 160,000 since 2010, excluding 2020 and 2021 due to COVID recovery numbers significantly influencing typical trends (1.80 Million jobs created in the August 2020 NFP!).
Taking a look at the Dollar Index
The US Dollar is up around 2.60% since last Thursday’s lows, which is shaking up FX markets.
In our previous US Dollar analysis, we mentioned a potential Break-Retest pattern from the 2025 Downtrend and after some strong data, the rally took the index from 97.15 to some 100.12 highs in the morning session.
US Dollar strength will be a key to monitor upcoming flows in August – A significant break above the 100.00 to 100.50 Resistance should accelerate the rebuying of Dollar-selling positions.
On the other hand, staying around the 100.00 should lead to some more longer-run consolidation for currencies – A stronger Dollar may also impair Equities a tid-bit, as they are still at record-highs.
FYI, the Weekly RSI on the Dollar Index is back right at neutral levels, coming back from oversold which would re-allow a more balanced buying/selling scenarios – Markets are once again at a tipping point.
What to Expect from this Upcoming Report
This upcoming report will be even more tricky than the previous one.
Seeing the major reversal in the US Dollar, participants will look to spot if this ongoing strength is poised to cancel more of the 2025 “Dollar-selling” flows, or if a weaker employment figure would provide a good point to resume the Dollar-selling trend.
I cannot emphasize enough how important the 100.00 level is in the DXY.
What’s priced in:
US Equity markets are at all-time highs and FX Majors have all corrected significantly since their July 1st highs.
Markets have reacted positively to the EU-US and Japan-US Trade Deals – More Deal announcements are expected, particularly with Mexico and China talks getting pushed back – For now, Equities are still trading in the TACO trade
Watch for potential sell-the-news on actual settlement of deals similar to what happened with the Euro.
What to expect (subject to largely different reactions as Markets are tough to predict):
Looking at the current state of pricing, Equities are at an extreme and Forex flows are more balanced after the strong July correction.
A miss would once again prompt the largest reactions, with US Dollar selling resuming in a flash, substantially higher pricing of a September cut (more cuts throughout 2025), and Equities correcting sharply.
A beat would shoot the Dollar higher yet again, with Equities following the same direction, Cuts getting priced out further towards 25 bps in 2025 and Gold would correct strongly.
An as-expected report (~ +/- 5K from the 110K expectations) would lead to a small correction in the USD and Equities, followed by more rangebound action throughout the first part of the month in the waiting of more data (Major focus on CPI).
The extent of such outcomes would depend on how large the beat/miss is.
Safe Trades for the upcoming NFP!
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