NFP! To taper or not to taper

<p>Today’s non-farm payrolls report is likely to seal the fate of the tapering debate and whether the Fed will indeed push back on its $85 […]</p>

Today’s non-farm payrolls report is likely to seal the fate of the tapering debate and whether the Fed will indeed push back on its $85 billion per month in bond purchases at their September meeting. US Treasury 10-year yields broke above the psychological 3% level yesterday following three strong readings from the US employment sector as jobless claims dropped to 323k and to a level not seen since 2007, with the ADP report coming in at 176k which was pretty much the consensus. The services ISM employment subcomponent survey rose to 57 from 53.2 and this has the market looking for a very high NFP number today. The consensus is looking for 180k today with the unemployment rate at 7.4% but I personally think this market has piled into dollars and only a reading above 225k can get this dollar strength extended.

As expected the overnight session has seen some profit taking ahead of the data particularly in USD/JPY, which is going to the most sensitive pair going in to the data. The pair dropped back below 100 with some media speculation that Istanbul is likely to be IOC’s choice for the 2020 Olympic Games, which pushed the Nikkei lower.

In other news there seems to be waning support for Fed Chairman candidate Larry Summers, with some Democrats on the Senate Banking Committee suggesting he will not receive their vote making the Summers/Yellen a very close call.

The G20 meeting has seen a lonely President Obama with more warnings coming from senior states of US strikes on Syria without UN approval and with UK PM David Cameron having his hands tied following his defeat on the vote in Parliament last week it seems the French restaurant in St Petersburg has a reservation for a table for two although I suspect we will hear more from this meeting before its conclusion.

 


EUR/USD

Supports 1.3100 1.3060 1.3000 | Resistance 1.3205 1.3230 1.3300


USD/JPY

Supports 99.15 98.50 97.80 | Resistance 100.30 100.80 101.65


GBP/USD

Supports 1.5565 1.5520 1.5450 | Resistance 1.5675 1.5720 1.5825

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.