NFP Preview: what to expect of EUR/USD

US Non-farm Payrolls are due later in the NA session. Market consensus sees the US economy creating 180K jobs during July and the unemployment rate to have ticked lower to 4.8% from June’s 4.9%.

After June’s strong gains, market participants expect the US labour market to keep the good health and to extend its moderate growth pace.

Regarding the FX space and according to ‘Rates, FX and Commodities Strategy’ at

TD Securities, “With the OIS rate pricing in about an 18% chance of a hike in September, this opens the possibility for a big response in the event of a surprise. We think 160K is probably the threshold for a “good” report, while 200K+ indicates a “strong” number. Anything below 160K probably closes the books on a September hike, adding renewed pressure on the USD. As long as NFP remains close to that breakeven level, high-beta currencies should hold up. Conversely, a strong number probably leads to fresh repricing of a September hike, lifting the greenback against the majors”.

EUR/USD still faces interim resistance at recent peaks in the 1.1230 area ahead of the 1.1260/90 band, where sits a retracement of the May-June drop and the base of the 8-month rising channel.