07.10.202211:19 Forex Analysis & Reviews: Noticeably weaker NFP data may trigger a new rally in markets (look out for an increase in EUR/USD and a decrease in USD/CAD)

Investors coming up with a reason to buy risky assets do not stop. Earlier, before the Fed meeting in September, many actively discussed whether the Fed would ease the pace of rate hikes under market pressure. But what happened was the opposite as after the meeting, the central bank raised rates to the previously announced 0.75%. This caused the collapse of the US stock market and with it the European and other markets.

And now, after the RBA did not raise the rate by the promised percentage, investors became excited again, deciding that it was the situation on the US labor market that could be the reason why the Fed will shift its stance on interest rates. But the employment report from ADP was not as expected since the number of jobs was above the forecast of 200,000, reaching 208,000. This caused the end of the two-day rally, and led to new declines in stock indices.

For today, the upcoming employment data in the US will be important. Forecasts say there should be 250,000 new jobs in September against 315,000 in August. If the data turns out to be lower than expected, hopes that the Fed will reduce the growth of rates will surge, which may cause a local increase in stocks and a decline in dollar.

Forecasts for today:

EUR/USD

The pair is trading below 0.9810. It may rise to 0.9920 if positive sentiment prevails today after a weak US employment data.

USD/CAD

The pair is trading above 1.3720. If the data on the number of new jobs in the US is below expectations, it may fall to around 1.3600.