Key Nonfarm Payroll that Could Determine First Rate Hike

3 April, 2015

Despite many markets being closed today we see the release of US nonfarm payrolls which have the potential to cause some volatility especially since volumes will be very thin. As if volatility had not increased enough in recent weeks, for those participating in the market a word of warning that FX movements have the potential to be significant.

If yesterday’s moves are anything to go by traders were positioning themselves for a weaker than expected nonfarm payroll today, which as mentioned is released on a bank holiday for many countries. The dollar softened even though the weekly jobless data was much lower than expected dragging the four weekly average to multi-week lows and this is one of the figures that is monitored closely by the Federal Reserve. The dollar bull trade remains a very crowded one and is still susceptible to further downside correction. This is most likely to be the case if we see a sub 200k figure today (244k is expected), which could see EURUSD recapture the 1.1000 level after it breached 1.0900 yesterday. The Federal Reserve has been clear that hikes in interest rates are data dependent, in particular with respect to labour market data. We’ve seen some robust nonfarm payrolls in recent months and the headline unemployment rate has fallen from 6.7% a year ago to 5.5%. However, it is not clear that the US economy is truly ready for monetary tightening yet, especially when you consider average hourly earnings aren’t quite as robust as Janet Yellen would like and the Fed would welcome a pause in the recently relentless rise of the dollar.

Those few people that think a rate hike is still on the cards this June could be sorely disappointed and we still believe that the first hike is some way off, if at all in 2015, the latter part of the year. But just to caveat that if the data does improve significantly following a tough US winter, then this view could be adjusted.


Source link  
U.S. Government Shuts Down

The U.S. government shutdown over the weekend as the Senate failed to pass a bill to keep the funds flowing late on Friday. The Democrats are making...

USD Index Retesting Significant Lows

The Economic calendar for today is very light, with main events in focus for the European trading session concentrating around German PPI...

Economic calendar is relatively light

Today is Martin Luther King’s Birthday, which is a Bank Holiday in the United States. As a result, the Economic Calendar is relatively light today...


US Tax Bill passes

On Wednesday, the US Senate approved the tax bill 51 for and 48 against, while the House of Representatives gave it final approval, passing it for the second time in two days after...

US dollar 'treading water'

USD is treading water ahead of the expected enactment of President Trump’s tax bill. The initial euphoria of lower corporation tax, that many...

CB Monetary Policy Unchanged

Thursday saw the latest Monetary Policy Committee (MPC) report from the Bank of England. The BoE stated that further modest increases...


No Surprises as Fed Raises Rates

The Federal Reserve, as expected, raised its benchmark interest rate by a quarter of a percentage point, to a range of 1.25% to 1.5%. The latest hike...

CB meetings dominate the week

With no impactful economic data releases on the calendar today, the markets are focusing on a plethora of Central Bank meetings scheduled...

No Surprises from BoC & ADP

In an unsurprising move, the Bank of Canada decided to hold its benchmark lending rate at 1%, after two small hikes earlier in 2017. The BoC stated...

  


Share: