• The US Bureau of Labor Statistics will release the non-farm payroll (NFP) and jobs data for February 2025 on Friday, March 7th, 2025.
• Economists are predicting 170,000 jobs added and the unemployment rate holding steady at 4.0%.
• Key factors influencing February’s jobs report include potential federal job cuts, changes in trade policies, a strong services sector, and mild weather conditions.
• Technical analysis of the US Dollar Index (DXY) shows it at a crossroads, where to next?

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The US Bureau of Labor Statistics is set to release the non-farm payroll and jobs data for February 2025 on Friday, March 7th, 2025.

Job Market Expectations for February

Economists predict 170,000 jobs were added in February, showing some improvement from January’s weaker result of 143,000 jobs. The unemployment rate is expected to stay at 4.0%, which is considered a healthy level given the current economic situation.

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However, private payroll data raised concerns by showing only 77,000 new jobs, which fell short of expectations. This might mean the overall jobs report could also disappoint.

Average hourly earnings are expected to grow by 0.3% compared to the previous month, continuing the steady increase seen before. Wage growth is an important factor for policymakers because it shows how much pressure there is on inflation in the economy.

There are challenges ahead with concerns that tariff uncertainty and growth worries may lead to a cautious approach toward hiring in the first part of 2025. It will be interesting to see if these concerns come to fruition and we see any cooling of the labor market and a drop in hiring. 

Key Influences on February’s Jobs Report

Federal Job Cuts

The Department of Government Efficiency (DOGE) recently announced plans to cut 10,000 federal jobs. However, because of the timing, these cuts may not fully show up in February’s jobs report but could have a bigger impact in future months.

 Changes in Trade Policies

New trade tariffs on goods from Mexico, Canada, and China are affecting how businesses hire. Some industries are benefiting, but others, like manufacturing, are facing challenges as they deal with higher costs and supply chain adjustments.

Strong Services Sector

The services industry continues to grow. The ISM’s non-manufacturing PMI rose to 53.5 in February from 52.8 in January. This is a good sign for jobs in areas like healthcare, hospitality, and professional services.

Mild Weather’s Impact

Warmer-than-usual weather in February likely boosted jobs in construction and other outdoor industries. This seasonal factor might slightly raise the overall job numbers for the month.

Potential Impact and Scenarios

Here’s how the market might respond to different outcomes in February’s job numbers:

1. Stronger-Than-Expected Job Growth

If the report shows more than 195,000 jobs added, we could see these effects:

A strong labor market might make the Federal Reserve less likely to cut rates soon, pushing bond yields up.

The U.S. dollar (USD) could strengthen against currencies like the euro (EUR) or the British pound (GBP) as traders expect less rate-cutting from the Fed.

Oddly, good job numbers might hurt stock markets. With less chance of rate cuts, investors could shy away from riskier assets like stocks.

1. Weaker-Than-Expected Job Growth

If the report shows fewer than 135,000 jobs added, the market may react this way:

Investors might move to safe-haven assets like gold or currencies such as the Japanese yen (JPY) or Swiss franc (CHF), fearing wider economic troubles.

A weak report could raise expectations that the Fed might cut rates later in 2025, lowering the value of the USD.

1. Neutral or Expected Job Numbers

If the data is close to projections, around 170,000 jobs added, reactions might depend on smaller details, like:

Changes to previous job numbers could shape market responses.

Wages growing faster than expected might revive concerns about inflation.

Solid growth in services jobs could provide some optimism for markets.

How the market reacts will greatly depend on these scenarios and the finer details of the report.

Potential Impact on the US Dollar Based on the Data Released

Source: LSEG, TradingEconomics. Table Created by Zain Vawda

Markets will be paying close attention to US labor data following a string of underwhelming data releases. The data of late has been one of a slowing economy, coupled with tariff uncertainty sets a perfect mixture for a potential recession. 

This will have a knock on effect globally which makes US data and the performance of the economy key in the months ahead. 

Technical Analysis – US Dollar Index (DXY)

Looking at the US Dollar Index and it is now trading at the levels it did before the US election.

Any gains made since the election of President Trump has been wiped away with the DXY peaking at 110.176 on January 13 before beginning its descent. Tariff announcements and chatter have attempted to push the Dollar higher but follow through has not been forthcoming as concerns linger about the impact tariffs may have on the USD as well.

This leaves the US Dollar Index (DXY) at a crossroads with a break below the swing low at 103.37 likely opening up further downside.

The silver lining may be that the DXY has lost a significant amount of value this week and could be due for a pullback. Potential profit taking ahead of the NFP release could also help.

If a move higher comes to fruition, initial resistance rests at 105.00 which houses the 200-day MA and could prove to be a tough nut to crack. A move above 105.00 opens up a retest of 105.63 and the previous swing low (Feb 26) at 106.130.

US Dollar Index (DXY) Daily Chart, March 6, 2024

Source: TradingView (click to enlarge)

Support

Resistance

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