Nonfarm Payrolls Preview: employment in the background as election looms

The US will release its October employment figures this Friday, but considering what happened this week with the FOMC, is clear that market's attention is somewhere else, specifically, in the local Presidential election. There's no favorite candidate, no clear winner at sight, and the toing and froing on who's leading polls has took its toll on financial markets, concerned over the future of US's foreign policy on a Trump victory. And while there's no guarantee that Mrs. Clinton will maintain the status-quo, markets have been inclined to think that she will.

In the meantime, the US economy has been doing good. However, there was no bright spot these last month, with macroeconomic figures being for the most, just ok. The employment sector has continued to stabilize, with weekly unemployment claims holding near four decades lows, in line with solid growth. The ADP private survey released last Wednesday, showed that the private sector added 147,000 new jobs in October, missing expectations of 165,000, although September figure suffered a strong upward revision, up to 202K from the originally reported 154K. Gains were concentrated in the services sector, but manufacturing shed 18,000 jobs according to the survey.

The US is expected to have added 175K new jobs during October, while the unemployment rate is expected to tick back lower to 4.9% from current 5.0%. As for wages, forecasts point to a 0.3% advance monthly basis, although the result may surprise to the upside, given the recent up-tick in spending. If the headline figure is in line with market's expectations, wages will determinate dollar's directional momentum.

 A positive macroeconomic note was the release of spending figures last Monday, as it rose by more than expected in September, up by 0.5%  after falling by 0.1% in August. The US PCE price index recorded a 0.2% increase in the month, unchanged from the previous month,  while the year-on-year increase was of 1.2% from 1.0% previously. The core PCE remain unchanged at 1.7% yearly basis. Inflation is rising, but still at a too modest pace, to force the FED into a rate hike.

Overall, the market is expected to offer a limited reaction to the news, as long as there's no shocking figure, either up or down, and wait for the outcome of the US Presidential election.

EUR/USD levels to watch

The EUR/USD pair is on retreat mode this Thursday, in spite of tepid US data after reaching a critical resistance area, the 1.1120 region. The level is a long term resistance/support, in where rallies either direction stalled multiple times over the last months. It also stands for the 61.8% retracement of the latest daily slide, and to reinforce the strength of the area, the daily chart shows that the 100 DMA stands just a few pips  above it. The price is currently around the 50% retracement of the same decline around 1.1060, and seems poised to consolidate around it ahead of the release.

The main resistance, is then the mentioned 1.1120 price zone, with a break above it exposing the 1.1160 level, another strong long term static resistance, ahead of 1.1200. The key support on the other hand is 1.1000/10, the next Fibonacci support, with a break below it probably seeing the pair closing the week in the 1.0900/50 region.