Once again we come to the US employment report, with the market looking for some revival in wage growth. Having consistent forecast a m/m move from 0.2% to 0.3%, we have failed to generate this, with some of the revisions posting a smaller 0.1% rise in average hourly earnings, so we have to prepare for disappointment again. As for headline number, anything inside 150-200k, will be deemed net positive to keep the underlying trend healthy as it currently stands.
Productivity is continually being blamed for lack of pick up in earnings, and while this often discarded measure remains weak, we can expect the lack of 'feed through' to maintain pressure on an annualised rate sticking to around the 2.4%-2.5% mark for now.
Projections on hourly earnings lie in the 0.1%-0.3% range and the lower end will naturally pour more USD sellers onto the market. We do get a sense however, that the market is looking for any hint of a positive signs and in the softer ISM data seen this week (though at odds with the Markit PMIs), the negative impact on the greenback away from the EUR has been relatively well contained at these depressed levels.
USD/JPY looks to be the more vulnerable today, and with the 10yr Note eyeing 2.20% again, the rates market will naturally dictate this pair. We have however, seen a disconnect with spreads elsewhere, with Bund (spreads) widening a touch, but to little effect on EUR/USD.
The commodity currencies are also tentatively on the turn again, but this is a natural function of the weak USD on the underlying, but any reversal in the greenback could have exponential results.
Lest we forget that Canada also releases its jobs report for July, and once again we see a modest call for a 10k rise against the 45.3k net gain seen, so the propensity for fresh downside here is back in play. The level of gains will dictate whether we can push past the low 1.2400's, which have proved stern resistance to the CAD of late.
UBS: 175K
Barclays (LON:BARC): 175K
HSBC: 175K
SocGen: 180K
TD Securities: 190K
Goldman Sachs (NYSE:GS): 190K
Oxford Economics: 195K
RBC: 220K
USD/JPY 1HR
USD/CAD 1HR
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