NFP Preview: what to expect of USD/JPY

The US Department of Labor will release today its Non-farm Payroll figures for the month of October. Prior surveys expect the economy to have created 175K jobs during last month, while the unemployment rate is seen ticking lower to 4.9% from September’s 5.0%.

Results at/above consensus would surely add to the already healthy condition of the US labour market, while they could reinforce at the same time the view that the Federal Reserve is on its way to hike rates at the December meeting.

According to strategists at TD Securities, “We expect an overall favorable tone to the October jobs report, reflecting payroll growth well above its breakeven pace and a pickup in wage gains. While the bar for a year-end rate hike is low in our view (barring a US election upset), the report is important for keeping December rate expectations firmly in place as any downside surprise will be noted by the Fed”.

Regarding FX, a positive reading at today’s releases could give some oxygen to the buck and push USD/JPY further away from the current area of 4-week lows, although the up move should remain limited by the ongoing uncertainty around the US presidential elections. Anyway, there is not much in terms of resistance levels until recent highs in the mid-105.00s, while the 100.00 area still remains a solid support.