Payrolls due, FOMC Splits
Markets’ psychological expectations for payrolls today are likely higher on the back of Thursday’s firm ADP print, but the FOMC minutes release has clearly added a new dimension on how the market should respond in the event of a stronger print. Given the sudden reluctance on the part of the FOMC to cease QE, and not just for economic reasons alone, firming of the labour market will solidify the view that the Fed will be more attentive to data, especially if it helps limit balance sheet expansion ahead. However, if data disappoints, it is highly possible that the December minutes become an afterthought and FOMC members reluctantly extend their accommodation outlook, so long as inflation and financial stability permit. We expect a headline print of +145k, but the unemployment rate may tick higher to 7.80%. Elsewhere, Canadian jobs figures are due, while services PMI releases are out in Europe. Overnight EURUSD traded 1.3019-1.3054 and USDJPY 87.26-87.83.
Click here to read the full report: UBS Morning Adviser Europe
UBS Investment Bank