Dollar, Yen May Rise on Disappointing US Employment Data

The US Dollar and Japanese Yen appear likely to rise on haven demand as leading indicators warn Septembers Nonfarm Payrolls print may disappoint.

Talking Points

• FX Markets Consolidate Overnight as Traders Wait for US Jobs Report

• Dollar, Yen to Rise on Haven Flows if Payrolls Fall Short of Expectations

The US Dollar consolidated in narrow ranges against the majors overnight as traders waited for US Employment figures to cross the wires. Expectations point to 115,000 increase in payrolls in September, marking a slight improvement following the previous month’s disappointing 96,000 gain. A slowdown in service-sector hiring revealed in September’s ISM data opens the door for a disappointment. On the other hand, yesterday’s jobs data from ADP points to a pickup, although that gauge has tended to overstate jobs gains since February so its forecasting potential seems suspect.

Economists’ forecasts continue to point toward a narrow acceleration in US economic growth compared with a slowdown in Asia and outright recession in the Europe this year. That means investors are likely looking to North America for an offset of headwinds elsewhere. With that in mind, a soft payrolls print is likely to weigh on risk appetite, rebooting haven demand for the US Dollar and driving the currency higher against most of its top counterparts. The Japanese Yen represents a lone exception, with USDJPY likely to decline following a disappointing outcome. Needless to say, a better-than-expected reading stands to produce the opposite results.

Asia Session: What Happened

Euro Session: What to Expect

Critical Levels

--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com

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