Trading preview: Will the Fed get some NFP icing on the inflation cake from the US employment report?

A busy week right to the last and next up is the big US non-farm payrolls

A big NFP data point today. The US will want to make sure that last month’s weather related negative number bounces back strongly. That puts a bit more emphasis on the headline number than usual, given how long we went with positive numbers.

Here’s a run down of what’s expected/prior;

NFP

Sep -33k (watch for revisions also)
Expectations are around 300/320k
BBG 302k
RTRS 310k
Hi ext 400k, lo est 120k
Median 313k
Average 302k
Private payrolls 303k vs -40k prior

Unemployment/wages

Unemployment rate 4.2% vs 4.2% prior
Average hourly earnings 0.2% vs 0.5% prior m/m
2.7% vs 2.9% prior y/y
Average hours 34.4 vs 34.4 prior
Participation rate 63.1% vs 63.1% prior
U6 underemployment rate 8.3% prior

The best pickers according to Bloomberg, and their guesses are;

Smith/Sweet – Moody’s 313k
Stephan Buu – CTI Capital 242k
Goldman Sachs 340k
Gregory Daco Oxford Economics 314k
Andreas Busch Bantleon Bank 320k

NFP pickers 03 11 2017

The saving grace for the report and the dollar last month was the stronger wages and falling unemployment rate. As we can see, the dollar ignored the headline number to gain on the other numbers.

USDJPY impact 30m

Trading levels to watch

Given we’ve got a hell of a lot of upside options in play from here through 114.50 in USDJPY, plus the early year’s highs around 114.30/50, we could have a big battle for the upside if the numbers are good all round. If we do break higher, there could be a lot of stops sitting through 114.50 which will accelerate any moves. The question will be whether any rallies can be sustained, or we just see a stop run and a reversal. If we do break higher I’d be looking at 115.00 to put up a fight. Anything moderately good, say on expectations, and there might be enough upside resistance to cap gains.

With most of the market looking for a bounce back, the big price risk is another headline miss and worse than expected wages numbers. That could mean a very quick trip down to 113.00, and worse. 112.90-113.00 and 112.50 will be the levels to watch.