USD mixed to firmer ahead of jobs – Scotiabank

The US Dollar (USD) is tracking a little higher ahead of the US jobs data at 8.30ET. Yesterday’s outperformers (JPY and CHF) in early trade here are today’s underperformers as the mood in equity markets improves, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

USD edges higher in quiet trade

“Broader market volatility is picking up. That should be no surprise ahead of the US election—the MOVE (bond) market vol index is around its highest in a year while the VIX is nudging back above 20 to its highest since early August. Uncertainty is perhaps helping the USD steady in the short run and it may be able to push a little higher this morning so long as the NFP is not a shocker. The consensus call for payrolls has edged steadily lower since last week and sits at a soft-ish 100k currently.”

“While weather– and strike-related issues would help explain away a poor number, a very soft number might lift Fed rate cut expectations. The Bloomberg “whisper” number, noting the jump in ADP private sector hiring last month, has moved the other way since mid-week and anticipates a 140k gain in jobs, however, and markets appear to be positioned for a decent, though perhaps not solid, gain in jobs. ISM Manufacturing data at 10ET is expected to show little change from September’s soft 47.2 reading.”

“Note that Dall Fed President Logan (non-voter) is on the calendar for a 9.45ET event. The Fed blackout is in effect ahead of next week’s FOMC decision so comments will not cover the economic or policy outlook. The DXY has found solid support in the upper 103 area through the latter part of the week and that should hold into the weekend and early next week as markets look to the US vote for the next directional cue for the USD.”