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US dollar outlook steadied as Danske flags solid July jobs data
Danske expects nonfarm payrolls to rise 70k in July, with unemployment at 4.2% and average hourly earnings up 0.3% month over month.
Danske Research expects the US labor market to remain firm ahead of the July jobs report, projecting nonfarm payrolls to increase by 70k. The firm also forecasts the unemployment rate will hold at 4.2% and average hourly earnings will rise 0.3% month over month, according to FXStreet.
The note points to leading indicators as still signaling solid labor conditions, while arguing productivity gains should cap unit labor cost growth and reduce the risk that labor becomes a major inflation driver for the Fed. Danske expects productivity growth to have picked up to 1.4% quarter over quarter annualized in Q2, versus 0.3% in Q1, limiting unit labor cost growth to 1.3% quarter over quarter annualized from 1.8%.
FXStreet also highlights other labor-market signals Danske cited, including the July Challenger Report showing 33,429 announced layoffs, the lowest level since July 2024. The note says the share of AI-linked layoffs has risen to as much as 33% of total layoffs, while initial and continuing jobless claims have stayed near low levels, with continuing claims at 1.801 million for the week ending 25 July.
Attention is also turning to Fed communication, with the FT reporting that Chair Warsh would maintain a no-guidance policy. FXStreet notes that Warsh could be prepared to raise interest rates at the September meeting if inflation prints remain elevated and markets price in higher borrowing costs, with an explanation of the communication framework expected at Jackson Hole on 22 August.