Synopsis:

Danske outlines their projections for the upcoming US jobs report and its implications for monetary policy.

Key Points:

• The main event this week is the US jobs report, with ISM manufacturing and services data also on the agenda.
• Danske forecasts nonfarm payrolls at 160k, above the 140k consensus.
• They expect average hourly earnings to decline to 0.2%, while the unemployment rate is anticipated to remain steady at 4.2%.
• If their forecast holds, this could reinforce market expectations for a 25bp Fed cut in November.

Implications:

• Higher nonfarm payrolls and stable unemployment would likely contribute to a stronger USD, with increased US yields.
• Given the current dovish pricing by the Fed, Danske believes much of the USD's potential downside is already accounted for.
• They project EUR/USD to approach 1.10 by year-end, reflecting a slightly bullish outlook on the USD in the near term.

Conclusion:

Danske's expectations for the jobs report suggest a favorable environment for the USD, driven by solid employment figures and potential market adjustments ahead of the Fed's November meeting.