US non-farm payrolls to give the USD its cues
The delayed September employment report arrives today in the US. Market consensus is looking for a 180k increase in nonfarm payrolls, which would be the strongest month since April. Our own estimate is a bit weaker at 170k, but a reading anywhere in the 160 to 190k range would probably be fairly neutral with respect to near-term USD direction given the data predates any impact from the October shutdown. Moreover, with the market now long EURUSD and GBPUSD according to our BNP Paribas Positioning Analysis, sensitivity would probably be greater to an upside surprise than to a modest downside miss. The unemployment rate will also be a focus, but here we anticipate a steady 7.3% reading, in line with market consensus. We remain short EURUSD and GBPUSD heading into the release, looking for gradual improvement in US data and dovish messaging from European policy makers to revive the policy divergence theme which benefitted the USD in Q2.
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BNP Paribas