Non-Farm Payrolls: What will traders be looking at?
In light of the US presidential election today’s NFP release may be the most important release of the month, with more focus on the political importance of the unemployment rate, rather than the economic importance of the payrolls. Unlike last month, an immediate Fed policy is not in play leaving room for the unemployment rate to set the tone of the next month of campaigning. With the unemployment rate likely to be a more important driver of FX market reactions today, a weak print of payrolls could be less negative for risk than usual. With the political cycle in mind, it looks like a bigger FX market reaction may be triggered should bad numbers come out, as they will be seen as further evening out the odds between Obama and Romney, especially after last night’s debate and subsequent narrowing in some election indicators. To sum up, it looks like the most risk positive (and on the same time USD negative) scenario is an increase in unemployment rate accompanied by a strong payroll’s print, i.e. the opposite of last month’s release.
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