The expected number for Non-Farm payroll in September is 140,000 jobs. A number less than 140,000 will not bode well for the USD. After poor economic numbers released by the US earlier this week, according to FED Fund futures, there is an 87% chance of a rate cut at the FOMC October 30th meeting. FED Vice Chairman Clarida said on Thursday that the US economy is in a “good place”, the labor market is “very healthy”, and that the central bank will act “as appropriate” one meeting at a time.
EUR/USD has eased off its overnight highs. Poor German and Eurozone economic releases have been offset by the US data. According to German Finance Minister Maas, the EU will respond to the tariffs imposed on their goods by the US with tariffs on their own.
The EU has given British Prime Minister Boris Johnson one week to make his Brexit plan acceptable. If PM Johnson cannot accomplish this then the EU will not discuss a Brexit deal at their summit meeting this month. GBP/USD is trading around their overnight low.
Poor economic US data have traders moving to “safety”. JPY was supported by the release of their Services PMI number which came in at 52.8, as expected, but below the previous number of 53.3. USD/JPY is close to an “oversold” situation and could face pullback from a positive NFP while good trade war news could see a quick reversal on short covering.
Weaker crude oil prices are putting pressure on the demand for commodity-linked currencies and the Canadian is at the low of the week. Concerns over the global oil demand is rising and could be affected by the US-China trade talks scheduled for next week. According to Saudi Arabia’s energy minister, oil output has been fully restored after the terrorist attacks last month. As oil prices rise, so will the Canadian Dollar.
After a break of more than two months, Chinese and American trade representatives return to the negotiation table next week. President Trump has said a trade deal could be expected 'sooner than you think'. In addition, news of Chinese companies starting to purchase US agricultural goods with a waiver from retaliatory import tariffs bodes well for the upcoming talks. Caution, however, should be warranted as earlier negotiations have broken down rather quickly.
NFP Release Update:
US Non-Farm Payroll showed an improvement of 136,000 jobs in September. This number was very close to the expected number of 140-145,000. The unemployment rate fell to 3.5% from 3.7%, the lowest rate since 1969. The July number was revised up by 7,000 to 166,000 and the August number was revised up by 38,000 to 168,000. The average over the last 3 months is 157,000.
The USD is higher after the release and the DOW Futures moved from -75 to +80. Stocks and Treasury markets are looking at the number in a positive way. FED Chairman Powell gives a speech later today with many investors interested to hear his comments on the release.