The dollar seesawed around two-month lows on Thursday, as traders weighed up how pivotal U.S. jobs data coming out on a stock trading holiday might impact Federal Reserve policy, and unleash a potentially volatile market reaction.
The closely watched U.S. non-farm payrolls report on Friday, when many markets around the world are closed, will follow disappointing manufacturing and services sector data from the Institute for Supply Management (ISM) and private employment figures on Wednesday.
While the slew of sluggish economic data has caused traders to scale back bets on how much longer U.S. rates would need to stay in restrictive territory, it has simultaneously reignited concerns about the risk of recession.
Economists polled by Reuters expect non-farm payrolls to have grown by 239,000 in March, following February's 311,000 gain. The NFP number has been far more prone to delivering upside surprises than misses in the last year or two.
For markets, this could make for a highly volatile session.
Michael Brown, a markets strategist at TraderX, said NFPs had beaten expectations 11 months in a row - the longest unbroken stretch of positive surprises in several decades.
"That's got to end at some point. It's almost ironic for it to come to an end on Good Friday, when liquidity is horrible and no one is trading the markets," he said.
"If we get a miss, I think it’s too soon for anything to change for policy again in May - they’re not going to over react to one jobs print. But in terms of trading it all, or expecting a logical market reaction to it, we're going to get absolute pandemonium whatever happens, there is not going to be the volume in the market," he said.
