This Friday, traders expect one of the most important fundamental releases - a report on the number of people employed in non-agricultural field of the US economy (Nonfarm payrolls). Based on the results of that publication, it will become even clearer how really strong the US dollar is.
Given the Fed's hints last week about the imminent interest rate increase, the positive NFP data can greatly strengthen the US currency. USD, unlike many of its competitors, has a real basis for growth. However, much will depend on the economic statistics and psychological reaction of markets to it.
Recall that last month the number of new jobs in non-agricultural sector in the US was only 142 thousand, which directly affected the Fed's decision that the increase in the key rate should be postponed until December of this year or even until the beginning of the next year.
If the new NFP will be around 200K, the probability that the US Fed is ready to raise interest rates already in December this year increases significantly. According to forecasts of US analysts, NFP figures will be about 180K.
We can assume that if the forecast is justified, the US dollar is likely to still strengthen its position just because of only positive dynamics.
James Rossiter, Senior Global Strategist at TD Securities, suggests that after the lacklustre performance over the past two months, we expect the US labor market to snap back to life in October with the pace of jobs growth rebounding to a respectable 193K pace
“While this remains well short of the 250K/monthly pace over the past year, it will nonetheless reflect a meaningful uptick from the subpar 139K average during the prior two months. The unemployment rate should remain unchanged at 5.1%. The overall tone of this report should be positive, as the resuscitation in jobs growth will allay fears that the employment wheels have fallen off,” he said.
As the US Federal Reserve are primarily interested in the dynamics of Nonfarm Payrolls, the value of the indicator in the area from 180 to 200K will likely be enough for supporters of changes in monetary policy. They will have an additional argument among the US Fed leadership in favor of December’s increase of the key interest rate.