USD: between NFP and US elections – Danske Bank

Morten Helt, Senior Analyst at Danske Bank, expects the price action around the greenback to hinge on today’s NFP and on the US elections outcome in the longer term.

Key Quotes

“Normally, the non-farm payroll number would be dearly anticipated and a critical market mover including for the USD. However, with five days to go to the US election and a neck-to-neck race between the two candidates, even the mother of all data releases is under threat to take a less prominent role”.

“Nevertheless, following the FOMC statement on Wednesday highlighting the need to ‘wait for some further evidence of continued progress toward its objectives’, the jobs report will be important for the Fed before it makes it mind up about a rate hike in December”.

“However, with the market more or less priced for a rate hike, we would probably need a very weak number to change the market’s mind and send the US dollar lower”.

“Hence, at the end of the day, focus will remain on next week’s election with the USD being more sensitive to election polls – in that regard, we see highly different directions for the EUR/USD following Tuesday’s outcome, with the cross likely to move to 1.13-1.14 in the case of a Trump win and 1.07-1.08 into the Fed’s December meeting if Clinton wins”.

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