US Dollar: US Expected To Lose More Than 1 Million Jobs In Just Two Months

The weight of recession is a reality that many of the world’s largest economies are already living with; but for the currency market, relative health is of greater fundamental significance than any absolute measures of economic health. This is the frame of mind we should be in when approaching the prospect of another five hundred thousand-plus jobs cut from American payrolls last month when speculating the impact the well-known market-moving Non-Farm Payroll (NFP) report could have of the US dollar.

And, with the greenback struggling to regain its footing against the euro, British pound and Japanese yen; a hit to growth forecasts of this magnitude could certainly redefine the currency’s long-term trend.
What is the Market Expecting for October Non-Farm Payrolls?

Taking a quick look at the official forecast from Bloomberg’s survey of economists, we can see that reports of generational lows in consumer confidence and sharp declines in consumption trends have been interpreted as evidence of another massive cut in employment through the end of 2008. The consensus is calling for an additional 523,000 jobs to be shed last month – a mere 10,000 fewer than the preliminary report for the previous period.

Picking the consensus apart, we further see that of the 72 estimates, the high water market was a dismal 350,000 cut; while the boldest prediction called for a loss of 750,000 jobs. Clearly this shows that regardless of the exact number of the net decline; the market does not doubt that the economy is in for a sizable jump in unemployment for the period.

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