USD: A blip in the strong US jobs story – ING

The latest US macro news has dampened the dollar rally. Consumer confidence rose more than expected from 99.5 to 108.7 yesterday, the strongest monthly gain since March 2021. Interestingly, for the first time since July 2023, the survey shows some improved optimism about future job availability, ING’s FX analyst Francesco Pesole notes.

US GDP report to prevent USD narrative turn negative

“The indications from the JOLTS job openings instead pointed to some cool-off in the jobs market. There was a revision in the August figure down to 7.8m, and the September print was 7.4m – well below the consensus of 8.0m. The JOLTS report also includes the quits rate, which has decreased sharply to 1.9% from the 3% early-2022 peak, when a high number of workers were leaving their jobs for higher-paid roles elsewhere.”

“The falling quits rate can indicate that there is indeed a greater scarcity of jobs but also that workers are more worried about the outlook and value job security. This is a net-negative indicator for the jobs market, but payrolls data needs to follow through with a soft read on Friday to convince markets to price back in Fed easing. The Fed funds futures curve is embedding 45bp of cuts over November and December.”

“Today, the US will release the advanced third-quarter GDP report, which includes the quarterly core PCE figures. These are expected at 2.1% QoQ, a decline from 2.8% in the second quarter. The ADP payrolls for October are also released today and are expected to have declined from 143k to 111k. Those have limited predictive power for actual payrolls, but can still move the market. We suspect a strong growth print can prevent the macro story from turning dollar-negative before payrolls on Friday, and allow Trump hedges and rising implied volatility to feed into a stronger dollar.”