1 Million new jobs
That’s what its going to take to turn the USD back up, anything less may not be enough to stop the depreciation of the greenback.
The market consensus is for a more modest, but in normal circumstance massive 978K. However, many traders are looking to the upside.
If we get an as expected number of 978k, I don’t think it will support the USD for long. Unless, March is revised up, and the unemployment rate drops more than the expected 5.8%.
The problem for the USD is that there are still 6 million people who had jobs before the pandemic, who are still out of work.
The Federal Reserves monetary policy is all about employment and it is unlikely to change tack, until full employment is achieved. The Fed say they see above target inflation as transitory. That theory will be tested soon, with record high commodity prices and a weak USD.
This week has seen good numbers from 2 ISM reports both above 60, but still missing expectations, also the ADP employment report missed. Will NFP also miss?
Even if we get a number above 1 million, with the twin trade and budget deficits, any renewed dollar strength will always be undermined.
The market loves the global recovery story, and will look to sell dollars even on strong US data. Because by Monday the NFP report will be forgotten.