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6 Nov 2015
US NFP: Tougher for the USD to gain further ground from here – MUFG
FXStreet (Delhi) - Derek Halpenny, European Head of GMR at MUFG, suggests that today is obviously a key day for the financial markets with the first of two key jobs reports ahead of the FOMC decision on 16th December.
Key Quotes
“The data related to the labour market since the weaker than expected September print all point to a rebound in the pace of jobs growth from the disappointing August and September readings (136k and 142k respectively). The steady flow of positive jobs data is reflected by the fact that our own internal BTMU NFP model is giving us an estimate of 230k for today’s reading, which implies the strongest jobs gain since June.”
“The unemployment rate is set to drop again and another decline in the U6 unemployment rate would take that measure into single digits for the first time since May 2008.”
“The earnings print is obviously also important and a 0.2% m/m gain will take the annual rate to 2.3% - if repeated in November and December, the annual rate will end 2015 at 2.5%, which would be the highest level since July 2009.”
“So we should certainly be in line for data today consistent with a “further improvement in the labour market” as demanded by the FOMC in its statement. So the bar is now very low for action in December but from a near-term perspective, the financial markets have increasingly come around to that view too.”
“But risk/reward for holding the dollar still looks reasonably good to us given it would really take a very weak report today to convince the market to reverse the increased probability of Fed action in December.”
Key Quotes
“The data related to the labour market since the weaker than expected September print all point to a rebound in the pace of jobs growth from the disappointing August and September readings (136k and 142k respectively). The steady flow of positive jobs data is reflected by the fact that our own internal BTMU NFP model is giving us an estimate of 230k for today’s reading, which implies the strongest jobs gain since June.”
“The unemployment rate is set to drop again and another decline in the U6 unemployment rate would take that measure into single digits for the first time since May 2008.”
“The earnings print is obviously also important and a 0.2% m/m gain will take the annual rate to 2.3% - if repeated in November and December, the annual rate will end 2015 at 2.5%, which would be the highest level since July 2009.”
“So we should certainly be in line for data today consistent with a “further improvement in the labour market” as demanded by the FOMC in its statement. So the bar is now very low for action in December but from a near-term perspective, the financial markets have increasingly come around to that view too.”
“But risk/reward for holding the dollar still looks reasonably good to us given it would really take a very weak report today to convince the market to reverse the increased probability of Fed action in December.”