US NFP: Market reaction should be fairly symmetrical – RBC CM

Adam Cole, Head, of G10 FX Strategy at RBC Capital Markets, suggests that the US July payrolls are the key release today, and with markets partly priced for a Fed rate hike before year-end (10bp or around 40% probability of a hike), the market reaction should be fairly symmetrical to an upside or downside surprise.

Key Quotes

“After the recent volatility, expectations are for a more trend-like release today. The consensus expectation is a 180K increase in payrolls and this has not changed significantly subsequent to the ADP report and ISM non-manufacturing survey. Neither of these early indications called the big upside surprise in the June data, although the ISM survey did correctly identify the weakness in the previous two months and is again calling for a weak release today (sub-100K at face value). RBC economists are close to consensus this month (170K) and also expect a fall in the unemployment rate to 4.8% (also in line with consensus).”