US NFP: Headline consensus is of 175K – RBC CM

Research Team at RBC Capital Markets, suggests that expectations for today’s headline payrolls release have not changed following the ADP report and ISM nonmanufacturing survey.

Key Quotes

“Both were weak, but neither has been helpful in predicting payrolls recently. The headline consensus of 175K is probably a fair representation of market expectations. With markets still 75% priced for a Fed hike by December, the hurdle for an upside surprise driving USD gains is probably quite high.

Each 10K upside (downside) surprise in the payrolls report results in a 0.1% fall (rise) in EUR/USD. The elasticity for USD/JPY is, in the long run, very similar, although there have been fewer outliers than for EUR/USD, as the direction of the USD/JPY reaction is less ambiguous when markets take their cues from equities.”