US stocks have been under tremendous pressure this week on intensified recession fears after poor ISM indices. Dollar also turned mixed after initial rally attempt. Focus will turn to non-farm payroll reports, which could be a make-or-break point for sentiments. Markets are expecting 140k job growth in the US in September. Unemployment rate is expected to be unchanged at 3.7%. Average hourly earnings is expected to grew 0.30% mom.
Other employment data from the US were generally disappointing. ISM manufacturing employment dropped from 47.4 to 46.3, deeper into contraction region. ISM non-manufacturing employment also dropped from 53.1 to 50.4, indicating almost no growth. ADP showed 135k growth in private sector jobs, which was not too bad. Four-week moving average of initial jobless claims was largely unchanged, down from 216k to 213k. Conference Board consumer confidence also dropped sharply from 134.2 to 125.1.
In case of downside surprises, 10-year yield would be also be one to watch, in additional to stocks and Dollar. TNX’s recovery from 1.429 has completed early than expected 1.903, ahead 2.123 fibonacci level. Further decline is now mildly in favor as long as 55 day EMA holds. Next target is a retest on 1.429 low. Break will resume medium term down trend. If that happens, USD/JPY could be a pair under most selling pressure.
