US equities surged overnight, with all three major indices notching solid gains as softer labour market data bolstered expectations of Federal Reserve easing. The ADP employment report came in below forecasts, while jobless claims edged higher — reinforcing signs of a cooling jobs market just hours before tonight’s critical Non-Farm Payrolls release.
The Dow Jones rose 0.77% to 45,621, the S&P 500 climbed 0.83% to a fresh record at 6,502, and the Nasdaq outperformed, up 0.98% to 21,707.
Bonds Rally, Dollar Holds Ground
Treasury markets saw strong demand, with yields falling to four-month lows. The 2-year yield eased 2.9bp to 3.587%, while the 10-year yield slipped 5.6bp to 4.161%.
Despite falling yields, the US dollar index (DXY) managed to edge higher, adding 0.13% to 98.27.
Commodities, however, were under pressure. Oil slid after a spike in inventories, with Brent crude down 1.18% to $66.80 and WTI off 1.05% to $63.30. Meanwhile, gold paused after its strong run, slipping 0.38% to $3,545.82.
All Eyes on Non-Farms Tonight
Markets are bracing for volatility as the US payrolls report takes centre stage. Earlier labour indicators — JOLTS, ADP, and jobless claims — have all signaled cracks in the employment market, fueling bets on faster Fed rate cuts.
- A weaker-than-expected print could spark a dollar selloff, with EUR, GBP, and AUD well-positioned for rebounds from support levels.
- Conversely, a strong surprise could catch markets off guard, triggering breakouts in USDJPY and USDCHF as they test major resistance.
Either way, traders should prepare for an eventful close to the week.
NFP Friday in Focus
Asian markets are likely to remain in consolidation mode with little on the calendar, while London trade will feature UK retail sales (+0.3% m/m expected). The real action, however, will unfold once New York opens.
Consensus forecasts for tonight’s US Non-Farm Payrolls:
- Payrolls: +75k
- Hourly earnings: +0.3%
- Unemployment rate: 4.3%
Adding to the mix, Canadian jobs data will also be released at the same time (employment +4.9k, jobless rate 7.0%). While this could stir CAD volatility, the spotlight remains firmly on the US numbers.