US October NFP data expected to underline US jobs market strength - BTMU

FXStreet (Łódź) - Derek Halpenny, European Head of Currency Strategy at the Bank of Tokyo Mitsubishi UFJ, believes that the US NFP numbers for October, due out this Friday, should point to another month of strong employment growth.

Key Quotes

"The contrast in monetary policy expectations between the US and Japan is likely to be reinforced this week with data that will underline the strength of the jobs market in the US. Initial claims on a 4-week average is currently at 281k, a level only recorded in one period before – 2000, when the US economy was booming."

"PMI data, the JOLTS report and other employment data all point to strong ADP and NFP employment reports this week. That will add to the momentum in the rates market that is quickly seeing the unusual drop in yields in the first half of October fully reversing. The 2-year government bond yield plunged from a high of 0.56% in early October to 0.31% on 15th October but is now trading back at 0.50%."

"The dollar looks attractive versus a number of currencies but USD/JPY logically may well be viewed as the line of least resistance for pushing the dollar higher. A key aspect in the jobs data will of course be whether there is any evidence of wage inflation."

"It’s worth noting that on Friday, the ECI came in stronger than expected at 0.7% Q/Q in Q3. Wages and salaries were the reason for that, with growth of 0.8%, up from 0.6% in Q2."

"It was the strongest quarterly growth rate since Q2 2008. Better wage data this week would provide the strongest buy signal for the dollar."