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On Friday, the US official employment report is due. Market consensus is for an increase of 690.000 in payrolls. According to analysts from TD Securities, the US dollar needs a very impressive report to rise further from the current level, as some upside hopes are already priced.
Key Quotes:
“Payrolls probably surged again, with the pace up from the +559k in May. Some acceleration in the private sector is suggested by the Homebase data, while government payrolls probably benefited from fewer than usual end-of-school-year layoffs. Our forecast implies a still-sizable 6.8mn net decline in payrolls from the pre-COVID level; more strengthening will likely be needed to achieve the Fed’s “substantial further progress” tapering criterion.”
“We think the USD is likely to revert to consolidation mode against most G10 peers if our base case for the June employment report is realized. Our estimate of +800K is a bit higher than the current analyst consensus, but we think FX markets would take this in stride as some upside hopes already look priced. After a solid run higher, we think the USD would need a particularly strong reading to see sustained upside from current levels.”