Forexlive Asia-pacific FX news wrap 6 Dec: Markets prepare for Jobs Friday

• Asian Pacific stocks mixing it up
• S. Korea Joint Chief of Staff: There is no reason to worry about a 2nd martial law
• S. Korea’s opposition parties lawmakers on high alert for another martial law declaration
• Pres. Elect Trump picks David Sacks to be WH crypto and AI Czar
• Geopolitics:S. Korea ruling party leader says Pres. Yoon needs to be suspended from office
• Reuters Poll: Reserve Bank of Australia to keep cash rate unchanged at 4.35%
• Japanese household spending -1.3% YoY versus -2.6% YoY expected
• US stock futures little changed on re-open
• Forexlive Americas FX news wrap: USD sags, bitcoin gives back $100,000
• No records today as stocks take a breather. Russell 2000 the worst performer
• The bears are throwing in the towel

A quiet Friday in the APAC session ahead of the US payroll numbers which will be released at 8:30 AM ET.

What is expected:

• Consensus estimate 200K
• Estimate range +155K to +275K
• September was +12K
• Private consensus +200K versus -28K prior
• Unemployment rate consensus estimate 4.2% versus 4.1% prior
• Prior unrounded unemployment rate 4.145%
• Prior participation rate 62.6%
• Prior underemployment U6 7.7%
• Avg hourly earnings y/y exp +3.9% versus +4.0% prior
• Avg hourly earnings m/m exp +0.3% versus +0.4% prior
• Avg weekly hours exp 34.3 versus 34.3 prior

What have the job numbers released so far hinting?:

• ADP report +146K versus +150K prior – Flat
• ISM services employment 51.5 vs 53.0 prior (down but still 2nd highest of the year) Marginally weaker
• Challenger job cuts 57,727 versus 55,597 prior. Flat
• Philly employment +8.6 vs -2.2 prior. Stronger
• Empire employment +0.9 vs +4.1 prior. Weaker
• Initial jobless claims survey week 215K versus 240K ahead of last month’s report. Stronger

It looks mixed to me.

The estimates for jobs are better this month with 200K expected (vs 12K last), but last month and this month’s data has been impacted by the Boeing strike, hurricanes and the election which skewed the numbers lower last month, and likely higher this month on the rebound.

As Adam points out the non-farm payroll number might require something in the order of 300K to stop the Fed from a 25 bp cut in December. My wonder is what does something like 150K or less do to the dollar?

We will see how the dust settles at 8:30 AM, but what we do know is that with a 12 1/2 days until the Fed decision, the market is pricing a 71% chance of 25 basis point cut.

What did the USD do to start the new trading day and ahead of the jobs numbers?

After trending lower yesterday, the USD is higher vs all the major currencies with the exception of the JPY. However, absent the AUD and the NZD which may have been scared lower by fears of a 2nd attempt for martial law conditions in S. Korea, the other major currencies are down 0.12% or less vs the USD.

A snapshot of the changes of the USD vs the major currencies shows:

• EUR, +0.11%
• JPY, -0.08%
• GBP, +0.12%
• CHF +0.03%
• CAD +0.08%
• AUD +0.36%
• NZD +0.46%

In other markets:

• Bitcoin +$1021 at $98078
• Gold up $10.66 or 0.40% at $2642.20
• US 2-year yield 4.113%, +1.0 bps
• US 10-year yield 4.178% -0.4 bps
• WTI crude oil near unchanged at $68.32
• Nikkei 225, down -343 points or -0.87%
• Shanghai composite +1.06%
• Hong Kongs Hang Seng +1.28%
• China CSI300 +1.34%
• S..Korea Kospi -0.57%
• Australias S&P/ASX index -0.63%

Fundamentally, Japan household spending data was better than expectations, and although the JPY is higher, it is not higher by much. As mentioned above, the biggest impact may have been the fear of martial law being enacted in S.Korea for the 2nd time this week (it was denied). Meanwhile, the opposition leader is looking to oust the current President as soon as possible. The uncertainty is enough to cause anxiety. PS Gold is up some $10.

Nevertheless, all will likely be forgotten by the time 8:30 AM ET roles around and the numbers hit the screen. Trader focus will be squarely on what lies ahead for the Fed not only in December but going forward as well. There is a 20% chance of another 25 basis point cut in January.

If the numbers are ambiguous, later at 1 PM, SF Fed Pres will be the speaking and she may be a sounding board for the Fed Chair. Fed’s Goolsbee and Fed’s Hammock will also be speaking after the data (and before Daly), but it will be Daly, that will likely garner the most attention. She will also be the last of the Fed speakers before the group at the Fed enter the blackout period before the Fed decision on December 18th. So be aware and be prepared.

PS Tomorrow Canada will also report their jobs report. The expectation is for 25K new jobs and 6.6% unemployment (vs 6.5% last month0

This article was written by ForexLive at www.forexlive.com.