NFP: Hyperbole in High Gear

NFP: hyperbole in high gear

Given the scope for massive short-term volatility, hyperbole is in high gear with everyone discussing Friday’s Non-Farm Payroll.

Without question, Jobs Day is always a monthly highlight, but given the Federal, Reserve Boards tilt at Jackson Hole, it plainly appears it will take a big surprise to derail a 2016 Fed Hike expectation at this point.

Investor odds of liftoff are hovering near 70% for December and Friday’s jobs data will offer more information about the probability of a hike in September, than anything else.

With London on holiday yesterday, markets were wafer thin, and price discovery provided little to no insight.

It’s been a relatively mixed bag to start the week as traders continue digesting the avalanche of Fed Speak at Jackson Hole. None the less, a few possible setups are taking shape.

Australian Dollar 

The Australian Dollar dug its heels in overnight and while gains were modest, it was one of the G-10’s better performers as traders become skeptical that the Fed will raise rates in September. Taking cues from inflation data, the AUD was underpinned by the US personal-consumption-expenditures price index which came in flat for July.

However, with the markets focus shifting to a high probability of a 2016 Fed lift off, this should ultimately be USD supportive, and the Aussie Yield Appeal could wane.

Japanese Yen 


There has been little following through on Kuroda’s Jackson Hole rhetoric, which is hardly surprising given the market’s propensity to discount BOJ policy. Regardless, USDJPY remains supported by the Federal Reserve Board’s recognized hawkish shifting forward guidance, despite cynics abound. Ultimately, I suspect the market will remain in neutral as we approach what’s expected to be a highly charged Non-Farm Payrolls event on Friday.

Oil Markets 


The US Rate Hike fidgets are weighing on traders sentiment. More significantly, supply concerns are mounting as Middle East producers continued to ramp up production. With exporters like Saudi Arabia production at record levels in July and likely to hit another high in August, one has to question the efficacy of a production freeze as OPEC churns near maximum capacity



This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Stephen Innes

Stephen Innes

Head of Trading APAC at OANDA
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes
Stephen Innes

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