US OUTLOOK/OPINION: Unemployment Rate Looks Set To Undershoot FOMC Forecast
Dec-05 19:31
- Consensus is evenly split between a 4.1% or 4.2% print for the unemployment rate in November after 4.145% in October. 30 analysts look for 4.1% and 30 for 4.2%, the median only set on 4.1 at typing owing to two eyeing 4.0% vs one at 4.3%.
- The unemployment rate should have been less distorted by any weather and strike impacts as people are still deemed employed if they couldn't work due to bad weather.
- Nevertheless, the household survey showed a high 512k weren't at work due to bad weather in October vs typical October readings of ~50k so the November reading is likely to be taken as a better gauge of the unemployment rate.
- Unlike the payrolls figures from the establishment survey, the unemployment rate isn't revised on a monthly basis (it's only revised with annual revisions due nearly next year).
- It would take a large upside surprise to see the unemployment rate not set for a sizeable undershoot of the median FOMC forecast of 4.4% for Q4, admittedly revised up sharply in the September SEP from 4.0% with the June SEP in what was likely a function of a worry the surprise lurch higher in the u/e rate from 4.05% to 4.25% back in July would extend in the near-term.
- When it comes to risks to the Nov rate, we wouldn’t be surprised to see a 4.2% reading but there are two-sided risks. They include the fact that household employment is due a rebound after -368k. The same can be said of the labour force though after the -220k in October was the weakest since May and before that Dec’23, opening a large gap with still strong estimates of working age population growth.
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USDJPY TECHS: Trend Structure Remains Bullish
Nov-05 19:30
- RES 4: 157.86 High Jul 19
- RES 3: 156.67 76.4% retracement of the Jul 3 - Sep 16 bear leg
- RES 2: 155.27 2.00 proj of the Sep 16 - 27 - 30 price swing
- RES 1: 153.88 High Oct 28
- PRICE: 152.36 @ 06:32 GMT Nov 5
- SUP 1: 151.46 Low Oct 25
- SUP 2: 150.86/149.11 20- and 50-day EMA values
- SUP 3: 147.35 Low Oct 8
- SUP 4: 145.92 Low Oct 4
The USDJPY trend needle continues to point north. Recent gains have confirmed a resumption of the current uptrend. Price has pierced 153.40, the 61.8% retracement of the downleg posted off the July 3rd high. A clear breach of this level would set the scene for an extension towards 155.27, a Fibonacci projection. Initial firm support is 149.11, the 50-day EMA. The 20-day EMA is at 150.86.
FOREX: Greenback Retreats Further as US Election Results Beckon
Nov-05 19:18
- Despite the odds for a Trump victory firming on Tuesday and an associated reversal higher for US yields, the dollar’s resolve is being tested and the USD index has extended session declines to 0.5% as the APAC crossover approaches.
- There has been broad strength for G10 currencies against the dollar, with AUD a notable outperformer and the Swiss Franc displaying a relatively contained trading range.
- For AUDUSD (+0.75%), the move has been assisted by the RBA maintaining a hawkish stance overnight, having seen little change in the economy over the last few months to warrant an adjustment to its higher-for-longer strategy.
- Price action narrows the gap to initial resistance at 0.6648, the 20-day EMA. The more significant 50-day resides at 0.6691, which may limit the short-term topside given overnight straddle pricing currently points to a ~50pip move either side of the strike.
- USDJPY (-0.35%) has also edged back below the 152 handle on Tuesday, printing a pullback low of 151.38. With the election remaining a close call, any early leanings towards a Harris victory could further weigh on USDJPY and there remains plenty of downside before initial firm support at 149.11, the 50-day EMA. The 20-day EMA is at 150.86.
- Significant volatility has already been seen in the Mexican peso, rising as high 20.3560, before sharply paring that advance back to 20.18 at typing. USDMXN overnight implied vol did clear 100 points - an all-time high for the contract. This implied a ~4% swing for USD/MXN on the results, and will place the pair under the spotlight as results begin to emerge.
- New Zealand employment data will play second fiddle to the US election developments overnight. Central bank decisions from Sweden, Norway, the BOE and Fed are all due Thursday.
MNI EXCLUSIVE: MNI Intervie on Bank Of Canada Policy Outlook
Nov-05 19:16
- MNI interviews member of Canada's Senate Banking Committee on monetary policy -- On MNI Policy MainWire now, for more details please contact sales@marketnews.com
