Dollar gearing up for jobs report

With the bulk of the day’s data done already, the greenback’s already looking beyond today and towards tomorrow morning’s read of Nonfarm Payrolls. Payrolls are, unsurprisingly expected to have been disrupted by the 2017 Atlantic hurricane season – looking at images of Florida, Puerto Rico, Texas, Louisiana and other states impacted, it’s easy to see how the destructive weather will have impacted economic activity.

As such, rather than usual 200,000ish estimate for nonfarm payrolls that we’ve grown accustomed to, economists are expecting a much more sombre 90,000 reading. Even if the figure comes in at double or half of expectations, it still won’t influence the Fed’s deliberations too much and as such, markets shouldn’t read too much into it either. Despite both the nonfarm payrolls headline figure and unemployment rate will be quick to react to the hurricane-induced volatility, wages data won’t be quite as sensitive. As such, it’s these figures the dollar will look to for a guide on inflation, direction and just how much pressure the Fed is under to raise rates. Average hourly earnings are expected to keep pace with the prior month at 2.5% Y/Y.

Services data storms higher

September non-manufacturing numbers from the States were very strong although an element of this performance will have come from a bounce back from hurricane related weakness. The US ADP jobs report showed growth of 135,000 jobs in September and while this is very imperfect indicator as to what will happen in Friday’s official jobs report, we are expecting a number that could easily be the weakest since March’s fall to 50,000.

We also have 4 Fed speakers due today with all expected to talk up the prospects of a rate hike in December.

Catalonia news drifts on

Catalan President Carles Puigdemont said “we will show our best face in coming days when our institutions apply the results of the referendum” being simultaneously open and opaque about exactly when the region will declare independence from the Spanish state. The euro’s traded in a tight range for the past 48 hours with neither side wanting to move the needle much as the event risk of an announcement is huge one way or the other. Patience is a precious commodity but we would not be surprised if investors sold the euro heading into the weekend in anticipation of an announcement over the weekend.

Have a great day.