Lackluster U.S. Non-Farm Payrolls (NFP) To Fuel EUR/USD Recovery

- U.S. Non-Farm Payrolls to Increase Less Than 200K for Third Consecutive Month.

- Unemployment Rate to Rebound to Annualized 4.7%, Average Hourly Earnings to Expand 2.8%.

Trading the News: U.S. Non-Farm Payrolls (NFP)

A 175K rise in U.S. Non-Farm Payrolls (NFP) may boost the appeal of the greenback and undermine the near-term recovery in EUR/USD as it puts increased pressure on the Federal Open Market Committee (FOMC) to further normalize monetary policy in 2017.

What’s Expected:

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Why Is This Event Important:

After voting unanimously to raise the benchmark interest rate at the December 14 meeting, Chair Janet Yellen and Co. appear to be on course to implement higher borrowing-costs as the central bank warns ‘if the labor market appeared to be tightening significantly more than expected, it might become necessary to adjust the Committee’s communications about the expected path of the federal funds rate, consistent with the possibility that a less gradual pace of increases could become appropriate.’ Indeed, a further improvement in labor market dynamics may prompt central bank officials to adopt a more hawkish outlook for monetary policy, but the 2017-rotation within the FOMC may push the committee to endorse a wait-and-see approach at the February 1 interest rate decision as officials argue ‘market-based measures of inflation compensation had moved up considerably but still were low; most survey-based measures of longer-term inflation expectations were little changed on balance.’

Expectations: Bullish Argument/Scenario