The JPY is the strongest and the NZD is the weakest as the NA session begins

As the North American session, the JPY is the strongest and the NZD is the weakest. The US jobs report will be released at 8:30 AM ET. The rundown of the expectations shows.

• Non-Farm Payrolls (Sep): Forecast 140k, Previous 142k
• Unemployment Rate (Sep): Forecast 4.2%, Previous 3.8%
• Average Earnings MM (Sep): Forecast 0.3%, Previous 0.4%
• Average Earnings YY (Sep): Forecast 3.8%, Previous 3.8
• Private Payrolls (Sep): Forecast 125k, Previous 118k
• Manufacturing Payrolls (Sep): Forecast -5k, Previous -24k
• Government Payrolls (Sep): Forecast N/A, Previous 24k
• Average Workweek Hours (Sep): Forecast 34.3, Previous 34.4
• Labor Force Participation (Sep): Forecast N/A, Previous 62.7%
• U6 Underemployment (Sep): Forecast N/A, Previous 7.9%

Numbers released so far this month:

• ADP report +143K versus +99K prior — this was a three-and-a-half year low
• ISM services employment 48.1 vs 50.2 prior (weak but first back-to-back reading above 50 since late-2023)
• ISM manufacturing employment 43.9 versus 47.1 prior
• Challenger job cuts 72,821 versus 75,891K prior — highest two-month period since 2009 (excluding pandemic)
• Philly employment +10.7 versus -5.7 prior
• Empire employment -5.7 versus -6.7 prior
• Initial jobless claims survey week 220K versus 233K prior (lowest reading in survey week since May)

In Adam’s preview, he warned that the seasonals are negative with the headline missing 69% of the time and beating 31% of the time, by 92K and 60K respective, (according to BMO). However 58% of unemployment rate readings have been lower than expected with 27% matching and 15% above.

On the potential market reaction Adam says::

“The other question is how the market will react. I tend to think that the market is still too long USD but it’s also too long Treasuries. Yield have been climbing higher and a strong number might crush the talk of 50 bps (priced at 35% now). Keep in mind, there will be one subsequent non-farm payrolls report after this one and before the Nov 7 FOMC”, Adam adds “Given that dynamic, I could see USD/JPY particularly strong on a strong jobs report”.

In other news, US dockworkers across the East and Gulf coasts will end their days-long strike after reaching a “tentative agreement” with large ocean shipping firms. The strike, which closed ports from Maine to Texas, cost the US economy up to $4.5 billion a day, impacting supply chains for goods like food and pharmaceuticals. The deal includes a 62% wage increase over six years, between the 77% sought by workers and the nearly 50% offered by employers. Despite this, concerns about job losses due to port automation remain. It is still “tentative” but there is some positive movement which could put the strike in the rearview mirror shortly.

ECB Vice President de Guindos stated that by the end of 2025, inflation and core inflation are expected to stabilize around 2%. However, he emphasized that it is too early to declare victory in the fight against inflation. He noted that recent inflation data had been favorable, surprising positively, but growth still poses risks on the downside.

BOEs Pill one that there is a reason for caution and assessing the dissipation of inflation persistence and that further cuts in the bank rate remain in prospect but it will be important to guard against the risk of cutting rates either too far or too fast. Yesterday the GBPUSD was the weakest of the major currencies, but has seen some upside corrective action today. The 200 bar moving average on the four hour chart at 1.31986 (call it 1.3200) is top side resistance. The price is currently trading at 1.3170.

NY Fed Pres. WIlliams will be speaking after the US jobs report at 9 AM ET. We will be on the lookout for comments from other news services.

A snapshot of the other markets as the North American session begins shows:

• Crude oil is trading up $1.07 or 1.45% at $74.78. At this time yesterday, the price was at $71.54
• Gold is trading up $6.97 or 0.26% at $2662.40. At this time yesterday, the price was $2648.57.
• Silver is trading up $0.18 or 0.60% at $32.16. At this time yesterday, the price is at $31.52
• Bitcoin is trading higher than this time yesterday at $61,403. At this time yesterday, the price was at $60,518
• Ethereum is trading higher than this time yesterday at $2383.07. At this time yesterday, the price was at $2341.07

In the premarket, the snapshot of the major indices trading marginally lower:

• Dow Industrial Average futures are implying a and up 67.25 points. Yesterday, the index fell -184.93 points or -0.44% at 42011.59
• S&P futures are implying a gain of 15.31 points. Yesterday, the index fell -9.60 points or -0.17% at 5699.94
• Nasdaq futures are implying a gain of 73.41 points. Yesterday, the index fell -6.65 points or -0.04% at 17918.48

Yesterday, the small-cap Russell 2000 fell -14.85 points or -0.68% at 2180.14

European stock indices are trading mixed:

• German DAX, +0.18%
• France CAC, +0.46%
• UK FTSE 100, -0.47%
• Spain’s Ibex, +0.01%
• Italy’s FTSE MIB, +0.69% (delayed by 10 minutes)

Shares in the Japan rebounded higher after yesterday’s declines. Hong Kong Hang Seng fell the first time after six straight days of gains: China is closed for the Golden Week.

• Japan’s Nikkei 225, +0.22%
• China’s Shanghai Composite Index, on holiday for Golden week
• Hong Kong’s Hang Seng index, +2.82%
• Australia S&P/ASX index, -0.67%

Looking at the US debt market, yields are mixed to higher:

• 2-year yield 3.743%, +2.9 basis points. At this time yesterday, the yield was at 3.662%
• 5-year yield 3.664%, +3.1 basis points. At this time yesterday, the yield was at 3.578%
• 10-year yield 3.870%, +2.3 basis points. At this time yesterday, the yield was at 3.807%
• 30-year yield 4.193%, +1.4 basis points. At this time yesterday, the yield was at 4.148%

Looking at the treasury yield curve it is modestly flatter:

• The 2-10 year spread is at +13.0 basis points. At this time yesterday, the yield spread was +14.6 basis points.
• The 2-30 year spread is at +45.3 basis points. At this time yesterday, the yield spread was +48.9 basis points.

In the European debt market, the 10 year yields are mostly higher:

This article was written by Greg Michalowski at www.forexlive.com.