Societe Generale analysts say macro data have been overshadowed by Middle East (ME) risks, with investors likely to seek safety in Dollar and Swiss Franc into the weekend absent de‑escalation. Strong US labour indicators skew risks toward another solid NFP, while energy prices are seen as the main drivers of FX and bond price action.

Safe‑haven flows and NFP risk dominate

"Macro data has been marginalised for obvious reasons so far this week and assuming there is no off-ramp and de-escalation by tomorrow in the ME one must assume that the fall-back position of investors will be to opt for safety of the dollar and Swissie into the weekend, hedging against a ratcheting up of the conflict and energy price levels."

"Four out of four US labour market anecdotes surprised to the upside and skew the risk to another solid NFP print tomorrow. The whisper number is up to 65k after solid ADP, two ISM employment data points and lower weekly jobless claims."

"Under the current circumstances, it’s a stretch to conclude that good data is reassuring and therefore bullish for risk assets and currencies (bearish dollar). The front-end of the curve has been repriced because of oil and nat gas, but could bonds get spooked tomorrow by NFP and fewer Fed cuts?"

"We assume that a 30k-70k employment gain should not move the dial and it’s where oil and natural gas prices close the week that we think will govern the price action."

"The 2.5 SD deviation of NFP vs consensus last month was uniformly positive for USD/G10 and USD/EM."

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