US non-farm payroll report is a major focus for today. Markets are expecting 200k job growth in the US in November. Unemployment rate is expected to be unchanged at 3.7%. Average hourly earnings is expected to rise 0.3% mom.
The significance of today’s set of data might not be as high as earlier expected, after Fed Chair Jerome Powell’s speech two days ago. Powell clearly indicated that it “makes sense” to start slowing the pace of rate hikes, as soon as this month. That is, a 50bps hike is pretty much a done deal.
What matter now are the terminal rate of the tightening cycle, and the time to stay there. A month’s job data shouldn’t alter the expectations on these two issues much.
A key development to note is the surprised steep decline in 10-year yield overnight. The move away from 55 day EMA is clearly a bearish sign. But 3.483 might provide at least some interim support. Let’s see today’s NFP would trigger a recovery in TNX. If that happens, USD/JPY could also follow for a recovery.
