USD Into This Week's NFP: The Return Of The Decoupling Trade - Credit Agricole

The key event in the US is the February jobs report, though we draw emphasis on ISM PMIs as well. Job growth likely maintained a healthy clip; we expect a rebound to 190K, keeping the 3-month average change near 200K.

The payroll print will be weighed against average hourly earnings and the unemployment rate, and the former has the risk of a weak rise due to calendar effects.

On balance, however, labour market data should confirm the resilience of US consumers and that could continue to support the USD especially given that Fed rate hikes have been aggressively priced out since the start of the year.

Turning to the ISM release, concerns may linger over the ISM non-manufacturing gauge in light of the dip in the Markit services PMI to contractionary territory. That said, the correlation between the two indicators is patchy at best and the market consensus is looking for a small improvement in the ISM.

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