Goldman: Awaiting Payrolls

Ahead of today’s NFP print Goldman Sachs note that “one downside risk is that September payrolls typically exhibit a downward bias in the initial prints, with job growth subsequently revised higher.”

• “However, on a stronger print, this would also suggest that the underlying momentum could be stronger than the headline suggests.”
• “The path to a risk-friendly soft landing has always been a narrow one, and so the main question for the upcoming labour market and inflation data is whether the recent growth re-acceleration (our Q3 GDP tracking estimate is now at 3.7%) will derail the rebalancing on both sides of the Fed's mandate.”
• “If the data suggests that the progress has stalled and more may have to be done, this would keep upward pressure on the USD, in particular relative to places that are less likely to match the U.S. due to their higher rate sensitivity (SEK) or where a larger weight is put on output volatility (GBP).”
• “Instead, a slightly below consensus print with some downward revisions to prior prints would likely be the most risk-friendly outcome and could allow EM currencies to recover some of their recent losses.”