Citi has commented on the potential impact of the upcoming jobs report on the USD. The report, which will be released on Friday, has markets anticipating different outcomes for currency pairs involving the USD, such as and , based on different scenarios from the Nonfarm Payrolls (NFP) data.
Citi analysts suggest that if the NFP data meets or exceeds consensus expectations, it could lead to a rise in the USDJPY and USDCHF. Additionally, higher beta foreign currencies could also see marginal appreciation against the USD due to reduced recession risk.
Conversely, if the NFP data slightly misses expectations, USDJPY and USDCHF could fall, but smooth repricing by the Federal Reserve could provide support to risky assets, potentially allowing higher beta currencies to outperform against the USD.
In the event of a noticeably weaker NFP, as forecast by Citi Economics at 70,000 new jobs and an unemployment rate of 4.3%, both the USDJPY and USDCHF could fall significantly. This scenario could also put pressure on higher beta currencies if increased risk aversion triggers a ‘bad news is bad news’ market reaction.
Citi’s analysis also highlights two key considerations for the upcoming jobs report. First, a stronger-than-expected report could have a negative impact, especially if the European Central Bank pivot narrative gains momentum and market trends toward euro selling increase.
Second, the range of possible data outcomes could put Federal Reserve and USD prices in a state of uncertainty. Federal Reserve Chairman Jerome Powell’s recent balanced rhetoric and the proximity of another jobs report before the November Federal Open Market Committee meeting could limit market moves unless there is an extreme divergence from the data.
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