Talking Points:

- October US NFPs look to come in around +160-175K; breakeven pace of jobs growth is around +100K, so even a middling, 'Goldilocks' would be good enough to drive down the unemployment rate.

- Fed funds futures continue to price near 80% odds of Fed hike in December; US Dollar pullback may be election-related. 

- Crude Oil, which we've been watching closely this week, is on pace to close down around -8%. 

The key issue surrounding today's October US Nonfarm Payrolls report is whether or not the US labor market will give one further indication that it is strong enough to justify a Fed rate hike in December. Current expectations for today's data are modest, with the Unemployment Rate expected to edge lower by one-tenth to 4.9%, and the headline jobs figure to come in at +175K.

The consensus expectation may be a bit too rich. Wednesday’s October US ADP payrolls showed +147K new jobs created in October, missing expectations of an increase of +165K. Similarly, the October US ISM Services Employment subindex eased from near 57 to 53.1, signalling a slower pace of labor market gains. In tandem, these proximal trackers of the US labor market correlate to roughly a +160K pace of jobs growth.

The trend of 200K jobs growth per month has recently been a psychological level for markets, but Fed leaders and centrists (the Goldilocks of the Fed; not too hawkish or too dovish) tend have another number in mind. In October 2015, San Fran Fed President John Williams wrote in a research note that he believed growth of +100K jobs per month was enough to sustain the growth in the labor force and maintain the current unemployment rate. In December 2015, Chair Janet Yellen reiterated this same view. By the Atlanta Fed Jobs Growth Calculator, assuming a 4.8% longer term unemployment rate, the economy only needs +120k job growth per month to sustain that level.

See the DailyFX economic calendar for today for the rest of the data previews.

On the surface, another modest print may seem to be better for the US Dollar rather than for risky assets (higher yielding currencies, equities, and high yield debt): a signs that the US labor market is still chugging along (albeit at a moderated pace as 'full employment' is reached') means the Fed will be more likely to hike. Yet rates markets are already saturated, with Fed fund futures implied probability of a December hike already at a lofty 78%.

It thus seems that the risk to the US Dollar is asymmetrical today. With the overhang of US elections clouding the US Dollar's near-term ability to track interest rate odds, it might not matter if there is a 'good' report today. In the event of a good report, markets will continue to focus on Tuesday's election, which has hurt the US Dollar; if it's a bad report, then not only will markets be focusing on the US elections, but they'll also be grappling with receding rate hike odds. Barring a blow out to the topside, it's tough to see how the October US NFP report can result in any sustained rebound in the US Dollar before Tuesday.

See the above video for a technical review of the DXY Index, EUR/USD, GBP/USD, AUD/USD, USD/JPY, and Crude Oil.