Quiet markets ahead of US nonfarm payrolls, USD firm

Investors are being cautious ahead of U.S. employment data today. The October nonfarm payrolls report is expected to show gains and this would bolster the case for a Federal Reserve interest rate increase in December.

Fed Chair Janet Yellen and New York Fed President William Dudley said this week that the U.S. was ready for higher interest rates if upcoming economic data justified them.

Economists are expecting the pace of jobs growth to have heated up, with the economy adding 185,000 jobs in October from 142,000 the month prior.

The unemployment rate, meanwhile, is forecast to have declined by 0.1 percentage point to 5 per cent. That would be the lowest level since 2008 and exactly half the peak level during the financial crisis in 2009.

However, decent payroll growth may not be sufficient if it is not accompanied by some signs of rising wage pressures.

There are expectations that average hourly earnings to have increased by 0.2 per cent on a month-over-month basis, after flat-lining in September. The year-over-year pace may have picked up to 2.3 per cent from 2.2 per cent.

Meanwhile data on Thursday showed that initial jobless claims in the U.S. last week recorded their biggest increase in eight months, but remained above the threshold associated with a healthy labor market.

The dollar held steady at 121.84 yen after touching a 2 1/2-month high of 122.01 on Thursday, while the euro was also little changed at $1.0880 after dropping to a nadir of $1.0834, its lowest level in more than three months.

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