News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
Real Time News
  • The US Dollar seems to be back on the offensive against its major counterparts, pressuring EUR/USD and NZD/USD lower as USD/JPY consolidates. USD/CHF surges past key resistance. Get your market update from @ddubrovskyFX here:https://t.co/MrLGSp7FYa https://t.co/XS0176LyOg
  • The Japanese Yen remains in focus with strength potential on risk aversion themes to go along with weakness on themes around higher rates. Get your weekly $JPY technical forecast from @JStanleyFX here: https://t.co/l4UICqJzJy https://t.co/dQ2pS0E4fp
  • Google finance-related search interest in 'Evergrande' has almost overtaken 'Covid'. 'Taper' doesn't even register on the scale https://t.co/P6H9sHFVIB
  • Gold prices gain as potential systemic risks out of China's Evergrande Group roil broader markets. Meanwhile, iron ore is ticking higher after a big drop on Monday as China steps up steelmaking curbs. Get your market update from @FxWestwater here:https://t.co/l4kAWDJ2wm https://t.co/b9m5ADIqqb
  • Gold remains higher despite positive Evergrande news out of China. Meanwhile, copper bulls are pushing prices upward as the potential for a housing crisis in China ebbs. Get your market update from @FxWestwater here:https://t.co/TK3MNntBdA https://t.co/14UKjR4w6M
  • GBP/USD has flattened overnight after its strongest rally in a month on Thursday. The British currency has been under pressure recently as an energy crisis has caused a number of gas providers to go bankrupt. Get your market update from @HathornSabin here:https://t.co/3D8s2eIVWv https://t.co/JDGNwKYyOn
  • Japanese candlesticks are a popular charting technique used by many traders, and the shooting star candle is no exception. Learn about the shooting star candlestick and how to trade it here: https://t.co/mfwJ0sIauS https://t.co/JIT5it2HAt
  • Gold could suffer further near-term losses due to rising U.S. Treasury yields and a weak technical picture for price action. Get your weekly gold forecast from @DColmanFX here: https://t.co/g9QvH3L4It https://t.co/Vz98E0Bl9U
  • Gold has been trending lower after failing to clear resistance in the $1835 area earlier this month. Get your $XAUUSD market update from @DColmanFX here:https://t.co/3hm1g3BHgf https://t.co/MdTQKEBCBx
  • Key break here in the 10-year #Treasury yield as it rises to the highest since late June Took out 1.4230 resistance, and the 100-day SMA Eyes now on the 38.2% Fib extension at 1.4775 Also potential falling resistance from March https://t.co/4cI6l210ui
Preview for November US NFPs and Outlook for US Dollar, FOMC

Preview for November US NFPs and Outlook for US Dollar, FOMC

Christopher Vecchio, CFA, Senior Strategist

Talking Points:

- December US NFPs look to come in around +180K; breakeven pace of jobs growth is around +100-120K, so even a middling, 'Goldilocks' would be good enough to drive down the unemployment rate.

- Fed funds futures continue to price 100% chance of Fed hike in December; only a severe miss will weigh on hike oddS - asymmetrical risk.

- Join the DailyFX Live Trading Room today at 13:15 GMT for live coverage of NFPs with Currency Analyst David Song.

The key issue surrounding today's November US Nonfarm Payrolls report is whether or not the US labor market will give further indication that it is strong enough to justify multiple rate hikes in 2017. Current expectations for today's data are modest (on the hotter side of 'Goldilocks,' but not too hot), with the Unemployment Rate expected to edge lower by one-tenth to 4.8%, and the headline jobs figure to come in at +180K.

The consensus expectation may be a bit soft. Wednesday’s November US ADP payrolls showed +216K new jobs created in November, easily beating expectations of an increase of +170K. Similarly, the November US ISM Manufacturing index gained to 54.1, signaling a faster pace of growth for a part of an economy that has been cast as struggling since the GFC . Unfortunately, we don't have the latest US ISM Serviecs Employment subindex to help guide our expectations this time around (due out next week). However, in sum, these proximal trackers of the US labor market correlate to roughly a +175-185K pace of jobs growth.

The trend of 200K jobs growth per month has recently been a psychological level for markets, but Fed leaders and centrists (the Goldilocks of the Fed; not too hawkish or too dovish) tend have another number in mind. In October 2015, San Fran Fed President John Williams wrote in a research note that he believed growth of +100K jobs per month was enough to sustain the growth in the labor force and maintain the current unemployment rate. In December 2015, Chair Janet Yellen reiterated this same view. By the Atlanta Fed Jobs Growth Calculator, assuming a 4.8% longer term unemployment rate, the economy only needs +120k job growth per month to sustain that level.

See the DailyFX economic calendar for today for the rest of the data previews.

It thus seems that the risk to the US Dollar is asymmetrical today. With Fed funds odds pricing in a 100% chance of a rate hike this month, it might not matter if there is a 'good' report today. In the event of a good report, markets will focus on wage growth, to see if the Fed is 'behind the curve.' At best, the Fed rate expectations curve can steepen, but it is already pricing in two rate hikes through the end of 2017 (June and December), whereas it was only pricing in one after the last NFP report (just December).

Barring a blow out to the topside, it's tough to see how the November US NFP report can result in anything better than reaffirming the greenback's fundamentally bullish posture; there is more opportunity to be had for traders in the event of a weak NFP report.

See the above video for a technical review of the DXY Index, EUR/USD, GBP/USD, AUD/USD, USD/JPY, EUR/GBP, and GBP/JPY.

Read more: EUR/GBP Continuation, GBP/JPY Reversal Gathering Pace

--- Written by Christopher Vecchio, Senior Currency Strategist

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

To be added to Christopher's e-mail distribution list, please fill out this form

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES