8 Jan 2016
US NFP: FX reactions to payrolls Surprises – RBC CM
FXStreet (Delhi) – Research Team at RBC Capital Markets, suggests that the recent payrolls releases have all played out conventionally (stronger payrolls = stronger USD), and the reactions to more material outliers have been close to “normal”.
Key Quotes
“Expectations for today’s headline payrolls release have edged up subsequent to the ADP report and ISM non-manufacturing survey. The consensus of forecasts that have been refreshed in the last few days is 210K – slightly above the 200K headline consensus. Our economists have not changed their below consensus call of 180K, but we also note in this week’s Total FX some risk that warm weather boosts employment through the winter.
Our ready reckoner estimates for December in the tables are based on the rule of thumb that each 10K upside (downside) surprise in the payrolls report results in a 0.1% fall (rise) in EUR/USD. The elasticity for USD/JPY is, in the long run, very similar, though there have been fewer outliers than for EUR/USD as the direction of the USD/JPY reaction is less ambiguous when markets take their cues from equities.”
Key Quotes
“Expectations for today’s headline payrolls release have edged up subsequent to the ADP report and ISM non-manufacturing survey. The consensus of forecasts that have been refreshed in the last few days is 210K – slightly above the 200K headline consensus. Our economists have not changed their below consensus call of 180K, but we also note in this week’s Total FX some risk that warm weather boosts employment through the winter.
Our ready reckoner estimates for December in the tables are based on the rule of thumb that each 10K upside (downside) surprise in the payrolls report results in a 0.1% fall (rise) in EUR/USD. The elasticity for USD/JPY is, in the long run, very similar, though there have been fewer outliers than for EUR/USD as the direction of the USD/JPY reaction is less ambiguous when markets take their cues from equities.”