###POV: NFP RISK WEIGHTED TOWARD USD DOWNSIDE....>

US: ###POV: NFP RISK WEIGHTED TOWARD USD DOWNSIDE

- Our US data team point to some upside risks to nonfarm November payrolls in

their `5 Things` preview. This is against a backdrop of Fed rate hikes being

aggressively priced out from markets over the past few days. 

- However, it is interesting to note that despite the big moves in money

markets, the dollar has not been hit as hard as would be expected.

- With a Dec hike now only at around 2/3 probability, a very strong employment

report would likely see the pricing for a Dec hike rise substantially.

- However, as the dollar has not yet priced in the recent drop in rate hike

expectations, it is unlikely we would see an outsized move higher for USD.

- Conversely, a downside surprise would likely see a sharp drop in USDJPY, with

the DXY also likely to catch up with money markets and move lower. Money markets

would likely continue their recent moves, with Eurodollar futures moving higher.

- Cross-country STIR future spreads have also blown out in recent days, with

Short Sterling-Eurodollar spreads and Euribor-Eurodollar spreads seeing

significant moves.