US Non Farm Payroll Data: How It Impact the Fed, Dollar, and Gold?

Markets are awaiting today, Friday, March 7, 2025 at 5:30 pm Dubai time, the US jobs data for February (NFP Data), which will be issued by the US Department of Labor. This data will have special importance as the US Federal Reserve relies on it to determine the path of monetary policy. Expectations indicate that the US economy added 159 thousand jobs compared to 143 thousand jobs added last August. Expectations also indicate that unemployment rates will stabilize at 4%, with the monthly wage rate declining to 0.3% compared to 0.5% for the previous reading.

Today’s report is expected to play a crucial role in shaping the Federal Reserve’s next monetary policy decision. The Fed stated at its last meeting that the labor market needed to slow before considering cutting interest rates. This makes today’s jobs data (US nonfarm payrolls) particularly important, as it comes ahead of the Fed’s March 19 meeting.

Scenarios Expected by Analysts For US Jobs Report Impact:

• If the data comes in weaker than expected, it may indicate a weakness in the US economy. Analysts expects that weak job growth may push the Federal Reserve towards a more accommodative stance at its next meeting, which may lead to an earlier than expected interest rate cut. This scenario could negatively impact the US dollar index while supporting gold prices as investors seek safe-haven assets, according to analysts’ expectations.
  
   
• On the other hand, a stronger-than-expected reading of US nonfarm payrolls data could indicate that the labor market remains resilient despite higher interest rates. A strong jobs report could reinforce the Fed’s dovish approach, In this case, the federal reserve may hesitate to ease policy, keeping interest rates higher for longer. Such an outcome would likely boost the dollar index while putting downward pressure on gold and stock markets, as investors brace for a prolonged period of tighter monetary policy, according to analysts’ expectations.

Therefore, when reading today's employment data expectations, we must balance between the possibility of continuing to tighten the pace of raising interest rates and slowing down this pace, given that the Federal Reserve relies on employment and inflation data to read the economic scene before making any decision related to interest rates.

The Dollar Index (Figure 1) broke an important support near the 106 level, and maintaining stability below this level is considered negative for prices, according to analysts' expectations.

Figure 1, DXY, Weekly, Tradingview