US January employment report is due out later at 1330 GMT

Here are some numbers you need to know ahead of the report release:

  • NFP estimate 180k; prior release 148k
  • Average estimate 184k
  • Highest estimate 245k
  • Lowest estimate 140k
  • Standard deviation 20.9k
  • Unemployment rate estimate 4.1%; prior release 4.1%
  • Participation rate was 62.7% prior
  • Average hourly earnings m/m estimate +0.2%; prior release +0.3%
  • Average hourly earnings y/y estimate +2.6%; prior release +2.5%

The initial market reaction could lean towards the headline estimate of the job print, but as always, the devil is in the details with the employment report over the last year. It's all about wages - so any post-data reaction should ultimately be driven by the average hourly earnings data when the dust settles.

The market is currently expecting the Fed to stick to three rate hikes, but risk is skewed towards the upside as some quarters feel that the Fed could even go up to four hikes this year. A lot of that will hinge on inflation or inflation-related data, and it doesn't come any bigger than this one.

There is a general view that wages should be seen as improving this year in the US as companies announced that they would be raising the minimum wage and offering extra bonuses - so expect more focus to be paid towards the wages data in the coming months as well.

At the moment, we're seeing the dollar quite well-bid ahead of the US session so that's something to take note of. The market has been shorting the dollar since the start of the year and this is about as big a risk event you could get in US markets, so it's not surprising to see some money being taken off the table.

But if wages data goes awry, we could see those flows come back in again.

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