US Dollar needs impressively strong NFP report to advance notably – MUFG
02.12.2022, 10:00

US Dollar needs impressively strong NFP report to advance notably – MUFG

The more nuanced approach to monetary policy going forward suggested by Fed Chair Powell’s speech means the jobs reports in the coming months will be even more important. Economists at MUFG Bank note that impressively strong Nonfarm Payrolls figures are needed to lift the US Dollar.

Jobs data increasingly important

“When Fed Chair Powell talks of avoiding ‘crashing the economy’ what the Fed really wants to engineer is a soft landing that means the scale of unemployment increase is kept to the minimum required to achieve a drop in inflation back to target. Hence, the importance of NFP reports.”  

“Given the momentum in the market favouring USD selling, we suspect a weaker than expected employment report would trigger a bigger market reaction than a stronger than expected report.”

“It would take less of a surprise we feel for the market to price in less tightening from the FOMC than more. So the bias feels skewed to a weaker Dollar today and a stronger jobs report would have to be impressively stronger to see the US Dollar advance notably.”

See – US NFP Preview: Forecasts from 10 major banks, less strong, but not weak

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