Economists are looking for the US to add 185K jobs in November, up from 128K in October. They are also looking for wage growth to accelerate and the unemployment rate to hold steady. While we believe that job growth improved over the last month, we are skeptical that it increased as much as 185K and anything short of 160K could trigger a sell-off in the US dollar.
Risk appetite is also wobbly which means that a softer report could have a bigger impact on USD/JPY and other major currencies than a strong one. If job growth falls short of expectations and wage growth fails to improve like economists anticipated, USD/JPY could fall towards 108 and EUR/USD could extend its gains to 1.1150. If jobs beat expectations as well, we should see USD/CAD underneath 1.3150.
Euro and sterling extended higher on Thursday while the Australian and New Zealand dollar rallies fizzled. The US dollar and other major currencies will take their cue for direction from today's US non-farm payrolls report.