Home›Forex›Major Pairs›BBH expects NFP-driven USD moves to be shallow and sho…

BBH expects NFP-driven USD moves to be shallow and short-lived

BBH forecasts July non-farm payrolls around 80k with unemployment steady at 4.2%, and says the priced in about 50 bps of tightening over the next year should not change much even after a beat.

Reported · Written up by our desk · Major Pairs

Brown Brothers Harriman’s (BBH) Elias Haddad expects July U.S. non-farm payrolls to show resilient labor demand, with consensus around 80k jobs and the unemployment rate holding at 4.2%.

In BBH’s view, a stronger-than-expected report would likely bring forward Federal Reserve hike expectations, but it is not expected to meaningfully alter the roughly 50 bps of tightening already priced over the next year.

BBH argues that, because Fed policy is already restrictive and wage growth appears consistent with the central bank’s 2% inflation target, any U.S. dollar strength from an NFP beat should be modest and short-lived.

Conversely, a weaker NFP print would trim rate hike expectations and weigh on the dollar, with FX traders looking to the data for the next directional push.

More like this

Sources