NFP Review - Strong Report, Not a Gamechanger
Event summary
A very strong labor market report from the US, with payrolls surprising to the upside at 254K vs 147K, keeping in mind employment figures were 72K higher due to upward revisions to the July & August figures Furthermore, the important unemployment rate declined to 4.05% from 4.22% contributing to a very strong overall release. As a result, the Fed pricing for 50 bps cuts declined and November now prices in a 25-bps cut. The USD index gained some 80 points to the report, which is relatively modest considering the strength of the report.
The upside dollar move had been capped to the first 1 hour of release & mean reverted quickly after which was consistent with our “Strong Report” scenario. With regards to narratives, The Fed is highly unlikely to overreact to a single data point with one more NFP on the way and plenty of other risk events in the pipeline. The immediate drivers around USD direction of travel depends on other developments (Iran, US CPI, China).
