Archived IMT (2008.10.03)

September payrolls fell by 159K, worst decline since May 2007, while the unemployment rate held at 6.1%. Although unchanged, the unemployment rate is widely expected to breach above the 6.3% rate in coming months, which would be the highest jobless rate since 1994. Our base call of 50-bps easing before year-end is now completely priced in the market, with about 55% chance of the cut emerging before the October 29 meeting. Further dollar losses seen likely against the yen (towards 104.50s) but not against European FX, especially as BoE is widely expected to cut rates next week.