The US economy has gained only 194,000 jobs in September, far below 488,000 expected. Does it derail the Federal Reserve's upcoming tapering? The USD modestly weakened on the weaker jobs print but economists at TD Securities think this is likely temporary given the payrolls number will do little to alter taper expectations.
Fed officials to follow through on plans to announce tapering
“The underlying details and revisions are not as discouraging as the topline miss would suggest and ultimately, this number will still keep the Fed committed to taper next month.”
“Given how the USD has traded recently, and its tight correlation to relative data surprise momentum, a softer tone should emerge. But, we do not think this number is convincing enough to be cause for a major reversal.”
“1.16 will be key for EUR/USD, but we expect this to be strong resistance.”
“The outlook for rates continues to be higher (particularly US 10y real rates) and thus, we think the funding currencies will continue to struggle against the USD.”