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Analysts at Bank of New Zealand (BNZ) offer key scenarios for trading the US labor market report due later this Friday at 1230 GMT.

Key Quotes:

“Even a strong payrolls report is unlikely to deter the Fed from cutting rates at its meeting later this month it seems, although expectations for a 50bp move will likely be pared back.  

A weaker than expected result will surely see heightened expectations that the Fed will commence its easing cycle with a 50bp move (the market prices 33bps at present).  

Recent equity market reactions suggest  we might be moving back into a world where ‘bad news is good news’.  

if the market interprets weaker data as increasing the chances of more aggressive monetary policy easing.  

This environment can plausibly persist as long as the market perceives the Fed’s actions as likely to reduce the risk of a major economic slow-down and avert recession.”