Title: Marketmind: No quiet end to the week, it's payrolls Friday

Jul 08, 2022 04:15AM ET

By: AnalysisWatch

Having already priced in half a percentage point of U.S. rate hikes this cycle, markets will try to subtract even more from the Fed's currently expected 3.4% peak if monthly labor market data is accurate later Friday.

A Reuters poll predicts nonfarm payrolls rose 268,000 last month after climbing 390,000 in May. Weekly jobless claims figures have already set the stage for a weaker number; more Americans filed claims for unemployment benefits last week than expected, while layoffs rose to a 16-month high.

So until there are stellar numbers, it looks like the Fed will slow the pace of rate hikes once this month's scheduled 75 basis point move is over—two of its hawkish officials signaled Thursday that could be the case.

While stocks around the world have rebounded after a sluggish first half, European and U.S. equities are expected to open weaker Friday. However, Japan's benchmark Nikkei index managed to close higher after being rocked by the shooting of former Prime Minister Shinzo Abe.

The shooting caused the yen to jump, but the currency has since recovered from earlier highs.

The whipping boy of the currency markets this week, however, has been the euro, which has fallen 2% against the dollar and is hovering on the edge of parity with the greenback.

It remains to be seen whether a strong U.S. payroll pushes the euro over the edge.