The Australian exchange rate foreign exchange, the US non-agricultural attack in July, can it wake up the dollar again?

The number of non-farm payrolls in the United States is expected to increase by 200,000 in July, slightly lower than the previous month's 209,000. The unemployment rate is expected to remain unchanged at 3.6% in July, while the average hourly wage annualized rate will lose some steam in July, falling to 4.2% from 4.4% in the previous month. A generally hot jobs report could fuel bets that the Federal Reserve's interest rate hike is not over, which in turn could help revive the dollar. If the July non-farm payroll data disappoints, it could do some damage to the dollar, pushing the EUR/USD higher towards the 1.1090 area.

At 20:30 Beijing time on Friday, August 4th, the US will release its non-farm payrolls report for July. Early indicators suggest that another strong jobs report will once again prove that the US economy is still far stronger than its competitors. That strength has not been reflected in the dollar recently as other central banks have rushed ahead of the Federal Reserve to raise interest rates, but that appears to be changing.

The US economy is resilient

It is becoming increasingly clear that the US economy has withstood the burden of rising interest rates without any real damage, with growth around 2 per cent, consumption remaining strong, the labour market healthy and even the housing market recovering.

While the overall US economy remains resilient, inflationary pressures appear to be easing, helped by lower energy prices.

As a result, recession fears have receded and hopes are growing for a soft landing in the US, in contrast to business surveys warning that Europe is in recession and Asia has been hit by a global manufacturing slump.

The non-farm payroll in July may slow down, but it won't be a tragedy

Nonfarm payrolls are expected to increase 200,000 in July, slightly lower than the previous month's 209,000. The unemployment rate is expected to remain unchanged at 3.6% in July, while the average hourly wage annualized rate will lose some steam in July, falling to 4.2% from 4.4% the previous month.

For the most part, these predictions are confirmed by earlier labour market indicators. Initial jobless claims fell in the US at the start of the month, suggesting there are no signs of large-scale layoffs. Meanwhile, business surveys show the slowest pace of job growth since January, but admittedly that's not much of a concern given that job growth has been excellent so far this year.

One area that may come as a surprise is wage growth, as these companies report rising wage pressures at a time when staff retention is challenging, so the risks around average hourly earnings may tilt upward.

A generally hot jobs report could fuel bets that the Federal Reserve's rate hike is not yet over, which in turn could help revive the dollar.Looking at the EUR/USD chart, the most critical area on the downside is the 1.0940 area, which represents a 50% Fibonacci retracement for the entire downtrend 2021-2022.

On the other hand, if the July non-agricultural data disappoints, it could cause some damage to the dollar and push the euro higher against the dollar towards the 1.1090 area.

EUR/USD daily chart

At 9:50 on August 3, Beijing time, the euro was trading at 1.0947/48 against the dollar.