Ahead today the main focus will be on the US October payrolls report. The market is looking for a solid bounce back of 184k from the 142k level seen a month earlier. This is above the 3m run rate of 167k but still below the 6m trend of 199. CACIB is below consensus at 165k yet close to the 3m trend. The unemployment rate is seen dropping to 5.0% and forecasters call for a 2.3% annual rise in wage growth. All three numbers will be closely watched but keep in mind our estimates show that at full employment the break-even level for NFP is 124k.
This is the first of two payrolls releases ahead of the December Fed meeting so stakes are high.
We look for an asymmetric response from the USD so expect it to rally on a number in line or above expectations.
Given our read of the breakeven payroll level (124 +/- 30k margin of error), we suspect that 150k is still a good release. More importantly, it should be strong enough to keep a December hike in play.
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