Macro/FX Watch: Yields could be highly sensitive to non-farm payrolls Macro/FX Watch: Yields could be highly sensitive to non-farm payrolls Macro/FX Watch: Yields could be highly sensitive to non-farm payrolls

Macro/FX Watch: Yields could be highly sensitive to non-farm payrolls

Forex 5 minutes to read
Charu Chanana

Market Strategist

Summary:  Markets remain focused on sell-off in the bond markets, and Treasury yields are being extremely sensitive to any labor market data. After contradicting messages from the volatile JOLTS report and unreliable ADP report this week, focus shifts to non-farm payrolls on Friday. We discuss what to expect. Meanwhile, commodity currencies have been hurt by the weak global sentiment, but we see scope for NZD to outperform AUD, CAD and NOK.

NFP Preview: Hot as JOLTS or cool as ADP?

Despite some respite, risks around the selloff in the US Treasuries continue to dominate markets. Labor market data remains heavily in focus this week and Treasury yields are showing an increasing sensitivity to that. 10-year yields jumped 7bps to 4.74% after Tuesday’s JOLTS data showed job openings were higher than expected, but slid 5bps on the release of ADP data yesterday which showed headline job growth fell below expectations. Given the volatility around JOLTS and the lack of ability of ADP to predict NFP, it is surprising that bond markets have been reacting sharply to these releases, and sets the stage for a potentially significant reaction on Friday’s jobs report as well.

US non-farm payroll report usually contains a number of significant releases, as discussed in this primer. With disinflation in progress, market will likely focus a lot more on headline job growth and the unemployment rate rather than the average hourly earnings, or the wage growth. The job market is weakening, although the pace remains modest for now. Job growth potentially remained supported in the last few month amid anticipated summer travel demand and the demand from concert tours. September data may show that the labor market cooled following the summer demand bump. However, if the headline remains strong, further drilling may be needed. Gains will have to be spread across sectors to send any signals that the job market may be re-heating, which remains unlikely in our view. Signals from ISM services, particularly the new orders component, also suggest that the US economy may be on a weaker footing from here.

The other key number of watch out for will be the participation rate, which has been rising since the pandemic-lows, and saw gains to 62.8% in August from 62.6% prior. As household budgets get stretched and credit cards get maxed out, more of the voluntary retirees could be looking to return to labor force. Jump in participation rate could help to boost the headline job growth while also potentially lowering the unemployment rate, but this can be a misleading sign. In addition, the effect of UAW strikes may not show up in the jobs report yet, but remains a drag for Q4.

Antipodeans: Growth divergence in focus

Both the RBA and RBNZ meetings this week ended in no changes to cash rate and continuation of the data-dependent mode. The tone from Australia’s new governor, Michele Bullock, was one of conviction that inflation will return to target. Australia’s economy is also losing stream, with retail sales plunging and consumer confidence taking a hit as labor market cools. Meanwhile, China story continues to remain underwhelming, providing little comfort for AUD. As global risk sentiment takes a hit, either because of the rapid sell-off in bond markets, or due to the concerns around the fallout from the high real rates, there remain little reasons to be optimistic on AUD in the short-run. Headline inflation could, however, see a bump higher due to the gasoline prices and the quarterly print due at the end of October could see some additional pricing for the RBA rate hike, but global sentiment will likely remain more of a factor.

RBNZ statement was also less hawkish than expected, and the bar for an additional rate hike will likely remain high. However, higher-for-longer could stick longer for the RBNZ compared to RBA, given NZ’s Q2 GDP witnessed a strong expansion. Terms of trade comparison between the antipodean currencies is shown in the chart below, and also suggests that improving NZ terms of trade could be a positive for NZD vs. other commodity currencies.

Elections are being held in NZ on October 14, which can bring some volatility for NZD. The opposition National Party seems to be leading the polls, which could be a positive for NZD if a clear or coalition government could be formed.

Market Takeaway: Growth differentials could bring further downside in AUDNZD to test 1.0650 or go further down to May lows of 1.0560. If oil prices go lower, NZDCAD or NZDNOK could also be prone to more upside.


The Saxo Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (
- Full disclaimer (

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Saxo Markets
88 Market Street
CapitaSpring #31-01
Singapore 048948

Contact Saxo

Select region


Saxo Capital Markets Pte Ltd ('Saxo Markets') is a company authorised and regulated by the Monetary Authority of Singapore (MAS) [Co. Reg. No.: 200601141M ] and is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Risk Warning to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as Margin FX products may result in your losses exceeding your initial deposits. Saxo Markets does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Markets does not take into account an individual’s needs, objectives or financial situation.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website are not intended for residents of the United States, Malaysia and Japan. Please click here to view our full disclaimer.

This advertisement has not been reviewed by the Monetary Authority of Singapore.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.