Danske Research Team highlights that the key release is the US February jobs report, where they expect Nonfarm Payrolls to slow to 70k and unemployment to hold at 4.3%. Weekly jobless claims remain low and layoffs are easing, while productivity has cooled and unit labour costs have risen. A strong report could further pressure US bond yields and swap rates.

Labour data key for Dollar direction

"The most important release today is the US February jobs report. Early high frequency indicators, like jobless claims, ADP's weekly private sector employment estimate and Indeed Hiring Lab's daily online job postings have generally signalled improving labour market conditions into February. We still expect a modest slowdown in NFP growth to +70k from 130k in January and unemployment rate to remain steady at 4.3%."

"In the US, weekly jobless claims remained steady at low levels, unchanged at 213k for the week ending 28 February. Continuing claims ticked slightly higher, but not meaningfully so. The February Challenger report showed that even though firms' hiring announcements remained subdued, layoff announcements declined sharply to 48.3k from January's 108k SA."

"Flash Q4 productivity growth slowed to 2.8% q/q AR (Q3: 5.2%), reflecting the weaker-than-expected GDP print from earlier. This lifted unit labour cost growth to 2.8% q/q AR (Q3: -1.8%). In the big picture, US labour cost pressures have cooled to modest levels in a historical context."

"Today, the US labour market report is released and if the report comes out to the strong side it will add to the pressure on bond yields and swap rates. We have seen a rise in both the VIX index and the Move index (equity and rates volatility) as well as credit spreads (such as ITRAX) but there have been modest moves in the Schatz ASW-spread, so we are still not seeing a significant risk-off move as we have seen in the past."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)