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Talking Points:
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US Dollar Likely to be More Response to Upbeat Jobs Data vs. the Alternative
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Risk Appetite May Firm on Strong US Payrolls Print, Hurting Euro and Yen
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Investors are likely to look past a quiet economic calendar in European trading hours to focus on September’s US Employment figures. An increase of 201,000 in non-farm payrolls is expected, while the jobless rate is seen holding unchanged at 5.1 percent. That would mark an improvement over the 173,000 gain in August, which may help bolster the case for the start of Fed stimulus withdrawal in 2015.
The implications of an upbeat outcome for the US Dollar seem relatively straight-forward. If traders walk away from the jobs report thinking a Fed rate hike seems more likely than previously, the currency will probably strengthen. Such a result may likewise help calm global slowdown fears and boost risk appetite, which ought to translate into outsized losses for funding currencies like the Euro and the Japanese Yen.
The markets’ response to a disappointing result is likely to be more timid than the alternative. Fed Funds futures suggest traders have already priced a 2015 rate increase out of the consensus forecast. That leaves relatively little room for a dovish adjustment to investors’ policy expectations. Risk appetite will probably sour however. In this scenario, the Euro and Yen are likely to outperform while the sentiment-geared Australian, Canadian and New Zealand Dollars face selling pressure.
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Asia Session
| GMT | CCY | EVENT | ACT | EXP | PREV |
| 23:30 | JPY | Jobless Rate (AUG) | 3.4% | 3.3% | 3.3% |
| 23:30 | JPY | Job-To-Applicant Ratio (AUG) | 1.23 | 1.21 | 1.21 |
| 23:30 | JPY | Overall Household Spending (YoY) (AUG) | 2.9% | 0.3% | -0.2% |
| 23:50 | JPY | Monetary Base (YoY) (SEP) | 35.1% | - | 33.3% |
| 23:50 | JPY | Monetary Base - End of Period (¥) (SEP) | 338.4T | - | 327.4T |
| 00:00 | NZD | ANZ Commodity Price (SEP) | 5.5% | - | -5.2% |
| 01:00 | AUD | HIA New Home Sales (MoM) (AUG) | 2.3% | - | -1.8% |
| 01:30 | AUD | Retail Sales (MoM) (AUG) | 0.4% | 0.4% | -0.1% |
European Session
| GMT | CCY | EVENT | EXP | PREV | IMPACT |
| 08:30 | GBP | Markit/CIPS UK Construction PMI (SEP) | 57.5 | 57.3 | Medium |
| 09:00 | EUR | Eurozone PPI (MoM) (AUG) | -0.6% | -0.1% | Low |
| 09:00 | EUR | Eurozone PPI (YoY) (AUG) | -2.4% | -2.1% | Low |
Critical Levels
| CCY | Supp 3 | Supp 2 | Supp 1 | Pivot Point | Res 1 | Res 2 | Res 3 |
| EURUSD | 1.1032 | 1.1106 | 1.1150 | 1.1180 | 1.1224 | 1.1254 | 1.1328 |
| GBPUSD | 1.4996 | 1.5068 | 1.5099 | 1.5140 | 1.5171 | 1.5212 | 1.5284 |
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com