US non-farm payrolls will be a major focus today. Markets are expecting US economy to have added 105k jobs in October. Unemployment rate is also expected to edge higher from 3.5% to 3.6%. Average hourly earnings are expected to grew 0.3% mom. Looking some other related data, ADP employment grew 125k, largely in-line with expectations. Four-week moving average of initial jobless claims rose slightly from 212.5k to 214.75k. Conference Board consumer confidence dropped from 126.3 to 125.9, but remained high.
US 10-year yields and USD/JPY will be the two to watch for NFP reactions. Both have been under much pressure after FOMC’s rate cut this week, as Jerome Powell didn’t sound firm on ending the so called “mid-cycle adjustment”. 10-year yield has apparently topped out at 1.860, below prior resistance at 1.903. Any downside surprises in the headline figure or wage growth could send TNX further lower towards 1.429 low. That could pave the way for a break through 1.429 later in Q4.
USD/JPY was rejected by 109.31 resistance earlier this week. The development argues that rebound from 104.45 was a three wave corrective move that has completed at 109.28. NFP disappointment or weakness in TNX could prompt further selling in USD/JPY to 106.48 support. Break will reaffirm medium term bearishness for a new low below 104.45.
