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Forex: Why This NFPs Can Spur Dollar Volatility and Trend

Forex: Why This NFPs Can Spur Dollar Volatility and Trend

2013-10-22 01:26:00
John Kicklighter, Chief Currency Strategist
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Talking Points:

• The delayed September NFPs are due, and there are leveraged short and long-term implications

• An inconsistent trend between dollar and risk can be settled by this important indicator

• For more fundamental heft, the jobs report can confirm or deny expectations of a March Taper

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The calm before the storm. Activity in the dollar-based majors and risk-sensitive capital markets grew ominously quiet before a key NFPs release. Beyond the short-term jolt of activity the payrolls 'surprise' can generate - particularly with an entire week to build momentum on - the true interest in this release is its ability to anchor yield and stimulus expectations. After the FOMC deferred its Taper in September and the US debt standoff delayed critical economic data, we find the market is projecting the first reduction in QE3 way out in March. That is a severe shift in expectations...and one that can generate a significant market reaction if disproved.

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