Dollar stays firm and remain one of the strongest major currencies as markets are awaiting employment data from US today. Stocks retreated mildly but both DJIA and S&P 500 stayed well inside recent upward trajectory. Treasury yields also extended recent rise with 30 year yield closed above 3% level at 3.013% while 10 year yield closed at 2.245%. Earlier this week, Fed chair Janet Yellen said that "if the incoming information supports that expectation then our statement indicates that December would be a live possibility". Fed fund futures are pricing in 58% chance of a December hike by Fed as of yesterday. Currency traders, bond and stocks investors are so far responding to such expectation well. And today's non-farm payroll will be another important piece of important for Fed's decision.
Economists are expecting Non-farm payroll report to show 180k growth in October, up fro prior month's 142k. Unemployment rate is expected to be unchanged at 5.1% while average hourly earnings are expected to grow 0.2% mom. The employment component of ISM manufacturing dropped notably to 47.6 in October, back in contraction region and was the lowest reading at least for this year. That's a concern for downside surprise from today's NFP. Nonetheless, the employment component of ISM services rose to 59.2 during the period. Four week moving average of initial jobless claims dropped from 267k to 263k and stayed low on historical standard. ADP private employment was steady and lost 8k to 182k only. Overall, the set of data still suggest a solid NFP report today.
Sterling turned into one of the weakest major currencies this week after yesterday's dovish BoE Super Thursday. The BOE voted 8-1 to keep the Bank rate unchanged at 0.5% with Ian McCafferty the sole dissenter proposing a rate hike. Yet, the message sent this month turned out to be more dovish than anticipated. The central bank now expects the first rate would begin later than previously suggested as UK's growth outlook might be somehow affected by slowdown in emerging market economies whilst inflation expectations in the short-terms are softened due to weakness in commodity prices. Also released today, BOE's Quarterly Inflation Report unveiled that the growth forecasts for 2015 and 2016 were revised, while inflation is not expected to reach its 2% inflation target for another 2 years with forecasts downgraded from this year through 2017. More in Super Thursday: BOE Surprises to Downside with Lower Growth and CPI Forecasts, Push Back in Tightening.
On the data front, Japan will release leading index. Germany will release industrial production. Swiss will release foreign currency reserves. UK will release industrial and manufacturing production and trade balance. US will release non-farm payroll and Canada will release both employment and building permits.