The dollar is telling you non-farm payrolls will be strong.
Here’s what you need to know:
- USD/JPY broke 100.00
- EUR/USD has fallen below the 200-day moving average
- USD/CHF broke the August highs
- US 10-year yields touched 2.98% — highest since 2011
The consensus is 180K from economists but the dollar strength and bond weakness today shows the market is pricing in something close to 200K. Here is a look at two of the best NFP predictors — ADP and the ISM non-manufacturing employment index — compared to NFP.
There are some conflicting signals there but the ISM employment component is my favorite signal and it’s especially good at predicting upside surprise.
That said, it’s a hard trade to make. One exception might be USD/JPY. It hasn’t moved that much today and it could make a big move a strong non-farm payrolls report.
