The US Dollar (USD) is trading lower overall ahead of this morning’s event risk. The calendar is bare aside from the BLS’ benchmark revision to the Establishment (jobs) survey which provides data for the monthly non-farm payrolls figures, Scotiabank’s Chief FX Strategists Shaun Osborne and Eric Theoret report.
USD trades broadly lower into BLS jobs revisions
« The update reflected a large downward adjustment in the number of jobs created in the preceding year in last August’s revisions. Another large downward revision in the data is expected in this morning’s revised data. Benchmark revisions can have a significant, short-term impact on rates and FX but last year’s dip in the USD and Treasury yields quickly reversed. Markets may be a little more sensitive to a big, negative revision today, however, given the current focus on labour markets and Fed policy, as well as the quality of BLS data reports. »
« A significant downward revision to the past year’s job creation figures will add to pressure on a soft-looking USD. The JPY is outperforming amid refreshed BoJ tightening chatter while the AUD is testing above 0.66 behind a jump in iron ore prices. The GBP is firmer and nearing recent peaks (and potential bull trigger) around 1.36. The EUR is lagging its core peers somewhat and trading little changed on the session. Global stocks are narrowly mixed while major bond markets are slightly weaker (ex OATs). »
« Gold reached a new cycle high earlier at $3659. Price action across the major currencies leaves the DXY trading at a minor new cycle low (lowest since late July) and straying further below technical support at 97.45/50. There is minor support at 97.10 now but price action may be shaping up for a retest of major support at 96.30 (early July low). Note Bloomberg reported that the Senate Banking panel will vote on Miran’s Fed nomination tomorrow, meaning he could be cleared to participate in next week’s FOMC deliberations. »