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In the European session, we don't have much on the agenda other that a couple of low-tier releases like the Swiss consumer confidence and the Eurozone retail sales. The data won't change anything for the respective central banks, so the market reaction will be muted.

The focus remains on the fallout from the US midterm elections and the US-Iran situation. The rout in tech stocks has weighed on growth expectations, putting pressure on Treasury yields and rate hike expectations. The probabilities for a December Fed rate hike fell to 67%, from roughly 80% earlier in the week.

In the American session, we get the US NFP report, the Canadian employment data and the University of Michigan consumer sentiment survey. The NFP is expected at 65K vs 29K, with the unemployment rate remaining unchanged at 4.2%. The Average Hourly Earnings Y/Y is expected at 2.9% vs 3.0% prior, while the M/M measure is seen at 0.3% vs 0.1% prior.

The reaction to data is going to be tricky because there could be something for everyone. A bad report could strengthen growth concerns and extend the risk-off sentiment. At the same time, it could also lead to a dovish repricing in interest rate expectations and support risk assets on a less hawkish Fed. In the current context, I would say the former is more probable.

The same goes for a good report. In this case, we might see a hawkish repricing that could weigh further on risk assets. But, good data could also trigger a relief rally on easing growth concerns. I guess the market would like to see good data, just not too hot.

The Canadian employment change is expected at 13.6K vs -68.3K prior, with the unemployment rate remaining unchanged at 6.8%. The market is pricing just a 38% chance of a BoC rate hike in December, so we will likely need a very strong report followed by hot inflation data to raise the probabilities. I personally think the BoC shouldn't have hiked based on the data as labour market conditions has been soft and underlying inflation has held around the 2% target. A global rout in stock markets would just add downward pressure on economic activity.

The University of Michigan consumer sentiment is expected at 48.0 vs 46.7 prior. We could see a minor rebound in the sentiment after the drop in gasoline prices, but I don't expect the data to matter much at this point.

This article was written by Giuseppe Dellamotta at investinglive.com.