The spotlight today falls on the eagerly awaited US Non-Farm Payroll (NFP) report, concluding a week marked by significant market events. Projections suggest a potential moderation in headline job growth, with expectations set at 178,000 for January, following December’s robust figure of 216,000. Concurrently, there is anticipation of a slight uptick in the unemployment rate from 3.7% to 3.8%, coupled with a deceleration in average hourly earnings growth to 0.3% month-on-month.
Preliminary indicators, including the ADP private employment figure, which recorded a modest growth of 107,000, and a marginal dip in the ISM manufacturing employment component to 47.1, hint at possible softness in headline job growth. The wildcard in this scenario remains wage growth, capable of exerting significant influence on market dynamics.
Post-NFP, all eyes will be on the 10-year yield, which has experienced a notable decline throughout the week. The pronounced downside momentum increases the likelihood of the resumption of the overarching downward trend from the 4.997 peak.
A decisive weekly close below the 3.785 support level would strengthen the bearish case, paving the way for the 10-year yield to reach the 61.8% projection of the decline from 4.997 to 3.785 from 4.198, settling at 3.448 this quarter. This scenario would also maintain pressure on the Dollar, particularly against the Yen. Market participants keenly await the NFP outcome and its potential ramifications on various financial instruments.
