No quiet end to the week, it’s payrolls Friday

A look at the day ahead in markets from Sujata Rao

Having already priced out half a percentage point worth of U.S. rate hikes this cycle, markets will be looking to shave off more from the currently expected 3.4% peak Fed rate if monthly jobs data later on Friday plays ball.

Nonfarm payrolls increased by 268,000 jobs last month after rising by 390,000 in May. Weekly jobless claims figures have already set the stage for a weaker number; more Americans filed unemployment benefit claims last week than expected, while layoffs surged to a 16-month high.

So, unless there’s a blowout figure, it does look like the Fed will slow the rate hike pace, once this month’s 75 basis-point move is past — two of its hawkish officials signalled on Thursday that could be the case

But while global stocks have rebounded after first-half gloom, European and U.S. shares are tipped for a weaker open on Friday (.STOXX), . However, Japan’s Nikkei managed to close in positive territory after being jolted by the shooting of former prime minister Shinzo Abe.

The shooting caused some knee-jerk yen gains but the currency has since eased off earlier highs .

But currency markets’ whipping boy this week has been the euro, which has fallen 2% against the dollar and is teetering on the brink of parity versus the greenback .

The wait is on to see whether a strong U.S. payrolls print pushes it over the edge.

Key developments that should provide more direction to markets on Friday:

  • Japan’s service sector sentiment posted its first fall in four months in June

-New York Fed President John Williams speaks

-U.S. non-farm payrolls