NFP preview: US labour market data

The latest US labour market data will round off the week. The market is expecting a reading of 109k for payrolls for July according to Bloomberg’s economist estimates, down from 147k in June.

By Kathleen Brooks, research director at XTB 

The latest US labour market data will round off the week. The market is expecting a reading of 109k for payrolls for July according to Bloomberg’s economist estimates, down from 147k in June. The unemployment rate is expected to tick higher to 4.2% from 4.1% last month. Annual wage growth is also expected to tick up a notch to 3.8%. Some analysts are looking for a much larger increase in payrolls for July, and for this week’s report to show another solid month of jobs growth. There are numerous factors that are underpinning the US labour market right now, including a smaller drop in government payrolls due to the end of Doge efficiencies in government departments, a pickup in construction hiring, and a boost to transport and logistics hiring as trade flows pick up once more due to a reduction in tariff turmoil. 

This suggests that those who thought the US economy would weaken will need to recalibrate their views, as a resilient US economy sets the stage for US stock market strength as we move through the second half of this year. 

The dollar view 

The resilience of the US economy in the face of tariff threats is also impacting the FX market. Since the previous NFP report the dollar has surged. The dollar index looks like it has put in a low above 96.50, and at the time of writing DXY was testing its 50-day sma at 98.30, after a broad weakening in the euro at the start of this week. Once the dollar clears this hurdle, it suggests that short term upside momentum is building, which could lead to further gains. 

We think that another positive reading for payrolls, around the 150K level, could trigger more dollar strength. The weakness in the euro this week means that the focus will be on EUR/USD during this payrolls report. In the one hour after the May and June payrolls readings, the euro weakened by 0.3% and 0.2% respectively, thus, another upside payrolls surprise could weigh further on the euro. Likewise, USD/JPY has a historically close relationship with the payrolls  report. Similar to EUR/USD, the JPY  has weakened after the last two payrolls readings were released. USD/JPY strengthened by 0.4% and 0.66% in May and June, respectively. 

Since the yen and the euro are key FX trading pairs for the USD, if these two currencies weaken vs. the USD on the back of this Friday’s payrolls report, then we could see broad based dollar strength as we move into August. 

Chart 1: USD performance vs. other G10 currencies since the start of July 2025. 

Source: Bloomberg and XTB. Past performance is not a reliable indicator of future results. 

Join us this Friday 1st August to get the July Non-Farm Payrolls report. Find out the latest data and get all of the market reaction live, from 13:20 BST.