Marketmind: 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, a Reuters poll predicts. 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. 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

(Reporting by Sujata Rao; editing by Dhara Ranasinghe)