NZD outperforms yet attentions remain affixed to US labour market data for direction into the weekly close

Key Movers

Price action across trade on Thursday quietened when marked back to the volatility enjoyed earlier in the week, as markets square positions and prepare for tonight’s all important US non-farm payroll print. ISM services data, weekly jobless claims and ADP payroll numbers printed largely in line with expectations and did little to sway the outlook for this month's Fed policy meeting. Most majors tracked sideways and while the yen enjoyed a boost following stronger than expected wage data and an elevated expectation for a faster correction to normalised monetary policy, the euro and GBP were largely unchanged. All attentions now sit with US Non-Farm payrolls. Labour market health will prove key in shaping Fed policy pricing and near-team ranges among majors. We are expecting a 165,000 gain in payrolls, a correction in the unemployment rate back to 4.2% and a small uptick in average hourly earnings. A print in line with these expectations will likely force investors to pare bets for a 50-point cut and should see a firming in pricing for a 25-point adjustment, adding support to the USD, while a further softening in employment conditions will again spark recession fears and drive a push for a more aggressive rate adjustment, likely pushing the USD lower into the weekly close.