Market Drivers November 1, 2019
China PMI beats
All eyes on NFP
Nikkei -0.33% Dax 0.417%
UST 10Y 1.68%
Oil $54/bbl
Gold $1513/oz
BTCUSD $9175

Europe and Asia:
CNY PMI Manufacturing 51.7 vs. 51.0

North America:
USD NFP 8:30
USD ISM Manufacturing 10:00

The dollar remained near its lows against most of the majors in Asian and early European trade ahead of the marquee event of the day as markets awaited the US Non-Farm Payrolls report at 12:30 GMT.

As many experts have pointed out today very modest expectation of 95,000 new jobs is the weakest forecast in more than 2 years so the possibility of a beat is generally strong but the key component in the report will be wage growth rather than job growth. Last month’s very disappointing reading of no growth in wages no doubt weighed heavily on consumer sentiment.

Today, the market expects a rebound to 0.3% pace which would be a piece of very good news if the data confirms the forecast as it would signal that the US economy continues to generate income growth ahead of the crucial Christmas spending season. On the other hand, another weak print would be a massive disappointment for the market indicating that US growth may have peaked and that income gains will be increasingly more difficult to achieve which will temper growth going forward.

For now, the US economic story has been one of divergence marked by a sharp contrast between the waning business sector sentiment and spending and relatively robust consumption, but today’s report could confirm that the weakness is starting to seep into consumption and if that’s the case the dollar is likely to drift lower.

For now, USD/JPY has held the 108.00 level in Asian and European dealing after falling hard from its post FOMC highs of 109.20. A better NFP report that stabilizes US rates could put a bottom for the pair at these levels, but a miss today will likely send the pair for a test of 107.50 and perhaps even lower as sentiment against the buck turns increasingly negative.