FX newsflash: US non-farm payrolls to drive USD volatility?

The latest US non-farm payrolls figure will be published on Friday, with the data potentially driving volatility in the US dollar.

At the time of writing, the US dollar is pulling back further from the multi-year highs struck at the start of the year. USD/EUR is over a cent below last week’s two-year high, while USD/GBP is one penny below the eight-month high it hit on the first trading day of 2025.

What is the payrolls report expected to show?

Forecasters expect the latest payrolls report to show that the US economy added 160,000 jobs in December. While this is a slowdown from November’s 227,000, it’s still a healthy number.

How could this impact USD?

The Federal Reserve keeps a close eye on the non-farm payrolls figure to guide its monetary policy decisions.

If the payrolls report indicates that the US labour market remains relatively robust, following some mixed readings over the past six months, then markets could further scale back expectations for more Fed interest rate cuts this year. This in turn will likely boost the US dollar.

Conversely, a weaker-than-forecast reading or a downward revision to November’s results could put pressure on the ‘greenback’.

Whether the data meets or misses expectations, it’s likely to prompt movement in USD on Friday.

In the meantime, we have the minutes from the Fed’s December decision out on Wednesday evening. With these likely to reiterate that the Fed expects to cut rates at a slower pace this year, they could boost the US dollar.

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