NFP preview: Payrolls to mean-revert to 150k in January - TD Securities

"We expects payrolls to mean-revert to 150k in January following the eye-popping jump to 312k in December," argued TD Securities analysts.

Key quotes

"In effect, we expect some of last month's unexpected gains in employment to be given back in January. In particular, we see scope for softness in the manufacturing sector after three consecutive months of solid payroll gains and as supported by the regional Fed surveys, which point to some weakness in manufacturing employment. In addition, employment in the retail sector may also revert back following a strong hiring streak during the holiday season (November-December)."

"This payrolls release is particularly tricky for FX given the impact from the government shutdown. As such, we are inclined to believe that some of the shock value associated with a downside surprise will be partially looked through as far as an FX reaction is concerned. To this end, we are inclined to put more weight on the ISM release later in the day as a better barometer of the concern the Fed has recently espoused."

"The Fed's dovish pivot suggests that USDJPY will be the currency pair to watch as the G10 has quickly evolved into a race to the bottom. Indeed, EUR's prospects remain troubled near-term. With Fed policy anchored for some time, a sell on rallies stance is appropriate for USDJPY. We expect 109.15 to represent interim resistance followed a very thick 110 barrier. 107.70/108.70 are key pivots to the downside."