U.S Futures and European markets are trading higher ahead of the key economic data. It is the U.S.-Non-Farm-Payroll data. Investors will be looking at the numbers very closely to figure out the strength of the economy. A strong number is going to push the sentiment for the dollar rally because this would simply imply that the Fed is likely to hike the interest rate.
Remember there are only two important things which matter the most for the U.S. markets; the strength of the economic data and the mid-term election. It appears that Trump is now ready to make a deal with China as there are some strong signs emerging for such a scenario. If Trump strikes a deal with China and Republicans wins the mid-term election and the U.S economic data continue to show its economic strength, the odds are really high that the global stock market is going to move higher. The strength of the U.S dollar would be irrelevant under those circumstances.
But let’s focus back on today’s event and what to look for in this data. Looking at the last month’s data, hurricane created major disruption and only 134K jobs were created in September. Hence, a snap back action is expected this month under which we could see the number jumping to 200K. Despite this, we do not expect any change in the unemployment rate or average hourly number. If these numbers do not change, we think traders would continue to take the profit off the table.
The arguments for strong payroll numbers are strength in the consumer confidence index & ADP data has set a positive tone for the U.S. NFP. The other side of the coin is that the employment component of ISM was weak and this sets the stage for the bearish dollar sentiment.
