Will NFP derail any of the good done this week?

Another exhausting week and we still have not been served up the grandaddy of all fundamental indicators, NFP. Keeping taps on who said what or who promised what is a game onto itself. Merkel has not changed her tune, fiscal union and the ECB is on the table-anything different not worth listening too. Sarkozy, in a huff over his country AAA situation, is jumping into the Germans bed and requires both countries to push for closer economic ties among euro nations and tougher enforcement of budget rules to counter “the regional debt crisis”. With Draghi signaling that the ECB is willing to do its part and fight the euro-crisis is helping improve market sentiment a tad this morning. Any strengthening of rules on government fiscal budgets would certainly allow the ECB to respond more aggressively to credit market and economic stress in Europe. This would allow them to be more proactive, rather than the typical Eurocratic reactive that we have come to know. Big picture, are European leaders moving closer towards agreeing to steps toward fiscal union in the run-up to the December 9 summit? Is this the bazooka?

Will NFP derail all the good done this week? US employment is expected to stay on track. “Punters” are betting that the headline print improved from last month's release. The market is forecasting a +160k reading and +175k for private payrolls with expectations slightly higher following the strong ADP number. The reaction to a solid number will probably be less vigorous than what we had in mind a few weeks ago. This month is in its infancy and there is much less recession fear priced in than say the end of October. This scenario will allow ‘less scope for upside data surprises to bolster risk sentiment or offset negative news from Europe'.

As usual, the market will get a North American employment tease release from Canada ahead of NFP. Last week, Stats Canada announced that they have decided to shift the timing of inflation and job reporting in Canada to coincide with US releases in April next year. Until then, according to the norm, the data is released and the loonie has to wait 90-minutes, until NFP, before it can react. The consensus forecast is that employment rose +20.0k last month, unlike the previous month where employment fell sharply, supporting a rate cut. However, stronger North American fundamentals since then has capped some of these recession fears.

Other Links:
EUR under pressure despite product out the door