Ahead of the key Nonfarm Payrolls data on Friday, the Consumer Confidence report revealed abundant availability of jobs. Given Friday’s NFP report will be the first since the FOMC, we could well see an outsized move given the sensitivity of potential changes in expectations of the timing of tapering beginning, according to economists at MUFG Bank.
A surge in net job availability in the US ahead of NFP
“The ‘Jobs Plentiful minus Jobs Hard to Get’ index surged in the confidence report yesterday and underlines the fact that if we see some easing of the labour supply problems then we could well see a big jobs gain in the report on Friday. After the 559K gain In May the market consensus on Bloomberg is for a 700K gain – the ‘whisper’ number is at 800k but could well be creeping higher still now.”
“A blowout report would certainly reinforce the building expectations that a September confirmation of tapering starting in Q4 would be delivered. The moves in FX spot certainly point to the continued existence of short USD speculative positions.”
“Expectations of a strong jobs report are rising now which is fuelling further USD strength which could well continue into the employment report and possibly beyond if expectations are confirmed or surpassed. The ADP employment report will be released today and after a much stronger than expected 978K gain last month, the consensus is for a 550K gain. Combined over a two-month period would still imply the potential for a strong NFP on Friday.”
“While we certainly see short-term upside risks for the US dollar we are less convinced further into the remainder of the year. We must remember that this tightening cycle is going to be far more synchronised globally than during the last Fed tightening cycle and we are likely to get confirmation of that as the remainder of the year unfolds. That will help provide support for non-dollar currencies, albeit possibly at lower levels.”
