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US NFP release to reinforce monetary divergence - BTMU

FXStreet (Łódź) - Derek Halpenny, European Head of Currency Strategy at the Bank of Tokyo Mitsubishi UFJ believes that the US jobs report for October, to be released later today, will reinforce the view of a widening monetary divergence.

Key Quotes

"ADP employment jumped by 230k with a slight upward revision to the previous month while other labour market data have also confirmed continued strength."

"The non-manufacturing ISM employment index increased to 59.6 in October, the sixth consecutive increase and the highest since August 2005. Initial claims yesterday fell again with the 4-week moving average back at levels seen in 2000. Our own regression model using nine different labour market variables has given us an estimate of 314k for today’s non-farm payrolls total."

"The other aspect for today is of course the annual earnings figure. The consensus is for a modest uptick to 2.1%."

"At some point soon, this measure is going to turn higher as well. Again our regression model on earnings is for the annual rate to move to about 3% by the middle of next year."

"Any upside surprise would have a big impact on rate expectations and the dollar. It is worth noting that the ECI data for Q3, released last Friday, showed an upside surprise in the wages and salaries component."

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