Consensus points to a 56,000 rebound for the NFP print, up from July’s 23,000 contraction (est. range between -25,000 and 121,000). Notably, the ‘whisper’ number is 30,000! Unemployment is expected to hold at 4.1% (est. range between 4.0% and 4.2%), while average hourly earnings are forecast to tick up 0.3% MM from 0.1% and cool to 3.0% YY from 3.2%.
For me, the path of least resistance is a broad miss. Trading a hot report – although it could generate a short-lived USD bid – would mean going up against two things: Crowded USD longs (CFTC positioning) and intervention risk. A miss should be the cleaner trade, tip the scale towards a Fed hold this month, and trigger a softer USD, particularly via USD/JPY, which now has two independent tailwinds pushing it lower rather than one.
The Canadian employment report will also be a key watch today at 12:30 pm, following the hawkish BoC earlier this week. You will recall that Governor Tiff Macklem noted that inflation is ‘running too high’ and flagged that multiple rate increases could be needed. So, if jobs data comes in broadly hotter, this could further lift the CAD.
Written by FP Markets Chief Market Analyst, Aaron Hill
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