NFP Friday Or NFI Friday?

Morning!

Is King Dollar back?

Nobody knows, but yesterday's $ strength means some are at least thinking about it now...

The Aussie had a beautiful move...

@pipczar

Massive Head & Shoulders, faked out support (when that chart was posted) which drew in some OMG it's a failed breakout buyers and then it sold off a little further.

Across most of the USD majors, recent ranges were broken.

How long will it last?

The U.S. dollar outlook is uncertain, with foreign exchange strategists in a Reuters poll almost evenly split on the greenback’s near-term direction following two months of broad weakness, as they await clearer signs from policymakers.

Just a lightening of USD shorts heading into NFP's today or the start of something more?

Renaming NFP to NFI (No F**king Idea): Just like last month there's a huge range of guesses, with the median coming in around 650k.

On top of that, got to keep an eye out for last months revisions.

It would not surprise me to see an upward revision to last months figure.

Imagining the carnage if today's print is 500k, but the previous month is revised up by 500k too.

ONE MILLION JOBS ADDED

The Market:

It's not my base case, just staying open to a wider range of outcomes than I would usually consider...

To really ram home the point about excess uncertainty, TD used Homebase (higher frequency) data which suggested hiring in May was worse than April & March.

Bill McBride (Calculated Risk) added some thoughts too

Messy.

Here's the guesses 👇

 🇺🇸🎯 Primary Dealer #NFPGuesses

UBS 810K

DB 800K

Citi 760K

GS 750K

SocGen 750K

Amherst 700K

Nomura 700K

WF 700K

Barx 675K

BMO 650K

Daiwa 650K

MS 650K

CS 600K

BofA 575K

HSBC 550K

JPM 550K

NatWest 550K

Mizuho 500K

RBC 500K

Scotia 500K

TD 500K

BNP 450K

Jefferies 450K

Median 650K— Anthony Barton (@ABartonMacro) June 4, 2021 

There's a huge amount to unpack within the data too.

You can make a ton of logical arguments such as 'Strong growth in leisure & hospitality jobs would indicate a faster path to normalisation of the jobs market'

Sounds good. Makes sense, right?

Most jobs were lost in those sectors so there's more jobs to bring back...

Will the market view it like that though?

No idea. So I'm trying to keep it simpler.

The Fed needs to see a stronger labour market to tighten policy.

That isn't just the number of jobs, it's also upward wage pressures (and requires a re-measuring of the active labour market post- Covid).

The way I'm looking at this:

Is the pace of the employment trend increasing or staying roughly the same?

ADP hinted at a stronger labour market yesterday, let's see if NFP confirms that hint, and how far ahead markets are looking.

In the next couple of months, this will get interesting 👇

Biden will comment on the jobs report at 15:15BST too

And he's not letting up on China...

US President Joe Biden is set to ban Americans from investing in dozens of Chinese tech and defence firms with alleged military ties.

The new executive order will come into effect on 2 August, hitting 59 firms including communications giant Huawei. The list of firms will be updated on a rolling basis.

It expands an order previously issued by former President Donald Trump.

Even before the official announcement, China suggested it would retaliate.

Under the new order, US investors will be banned from buying or selling publicly-traded securities for other companies including the China General Nuclear Power Corporation, China Mobile Limited and Costar Group.

It expands the previous list from 31 firms to include surveillance companies and is aimed at ensuring "US persons are not financing the military industrial complex of the People's Republic of China," one White House official said.

Recommended read on China eyeing up Taiwan 👇

Some chunky option expiries to keep an eye on

EUR/USD: 1.2050 (477M), 1.2100-10 (1.4BLN), 1.2120-30 (684M), 1.2150 (1BLN), 1.2170-75 (1.2BLN), 1.2200 (1.1BLN)

EUR/GBP: 0.8450 (200M), 0.8535-50 (900M), 0.8625 (229M)

GBP/USD: 1.4050 (204M), 1.4240 (380M)

AUD/NZD: 1.0600 (200M)

AUD/USD: 0.7600 (392M), 0.7660-75 (422M), 0.7700 (236M), 0.7730-50 (1.8BLN), 0.7780-0.7800 (2.3BLN)

USD/CAD: 1.2030-35 (425M), 1.2100 (322M), 1.2150 (290M)

USD/JPY: 109.90-110.00 (1.4BLN), 110.20-25 (580M), 110.40-50 (612M)Source: DTCC