FXStreet reported that TD Securities expects the U.S. dollar to surrender some of its recent rally by year-end, with a weaker October jobs result potentially bringing that pullback forward.
FXStreet attributed the view to the bank's foreign-exchange team, led by Jayati Bharadwaj, head of FX strategy, and FX strategist Howard Du. The team forecasts 40,000 nonfarm jobs added in October. FXStreet described that estimate as below consensus and said the team viewed it as within a range consistent with breakeven job gains and sufficient to lift the three-month average.
The U.S. Bureau of Labor Statistics reported that payrolls rose by 29,000 in September and unemployment stood at 4.2%. Monthly payroll gains averaged 45,000 over the 12 months through September, the agency said. If realized, TD's October projection would be 11,000 above September's increase and 5,000 below that 12-month average.
The team also sees options-market positioning leaning toward a weaker dollar, FXStreet reported. The outlet said the strategists compared their expected dollar move with the currency's performance after the 2018 U.S. midterm election. The comparison follows the earlier TD Securities Sees Dollar Weakness if U.S. Stocks Lag, FXStreet Reports.
FXStreet also reported that TD expects the Federal Reserve to raise rates in December, citing its assessment that economic activity remains firm and inflation risks persist. That is the bank's forecast, not a Federal Reserve decision. The Federal Open Market Committee's next meeting is scheduled for Dec. 8-9.
The Bureau of Labor Statistics is scheduled to release its October Employment Situation report Friday, Nov. 6, at 8:30 a.m. ET (13:30 UTC).
