Strong NFP print not guaranteed today despite positive jobs data

Matthew Ryan, CFA Ebury

The dollar has been on the front foot all week amid a combination of Monday’s hawkish comments from FOMC chair Powell, rising geopolitical risks and some solid US economic data.

Thursday’s services PMI from ISM was very pleasing on the eye, with the index rising back up to 54.9 from 51.5, well above the 51.7 consensus and its highest level since February 2023. This not only effectively puts to bed any concerns over an imminent slowdown but suggest that activity is actually accelerating as we head into year-end.

Focus now turns firmly to this afternoon’s payrolls report for September.

US labour indicators this week have been largely positive, with the ADP employment change number (143k from 103k) and job openings (8.04M vs. 7.7M) up on the previous month. While this could point to a stronger NFP print today, it far from guarantees one.

Economists are bracing for another job creation print around the 140k level, with annual earnings and the jobless rate set to remain unchanged. Another rate reduction from the Fed in November seems set in stone, but we think that we would need to see a relatively sizable miss in today’s data for markets to start seriously considering a second straight 50bp cut.

Author

Matthew Ryan, CFA

Ebury

Matthew is Global Head of Market Strategy at FX specialist Ebury, where he has been part of the strategy team since 2014. He provides fundamental FX analysis for a wide range of G10 and emerging market currencies.

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