USD: US labour market on a solid trajectory

September 7, 2015

Lee Hardman, Currency Analyst at MUFG notes that the recent NFP data release has indicates the improving labour Market conditions in the US which is one of the key condition for the Fed to begin increasing rates.

Key Quotes

“The US dollar has remained on a firmer footing in the Asian trading session supported by the release on Friday of another solid US non-farm employment report which will move the Fed another step closer to raising interest rates. The report revealed that employment growth slowed to 173k in August, although it most likely under reports the true strength of employment growth and is expected to be revised higher in the future similar to in recent years0”

“The household survey was even more encouraging revealing that the unemployment rate declined by a further 0.2 percentage point to 5.1% moving into line with the FOMC’s longer run estimate of the unemployment rate at between 5.0% and 5.2%. The FOMC did not expect the unemployment rate to average as low 5.1% until the final quarter of next year.”

“The report provides further evidence that US labour market conditions have continued to improve which has been cited by the Fed as one key condition required to begin raising interest rates. Still the market remains unconvinced the Fed will begin to raise interest rates this month as it is placing greater weight on the heightened uncertainty in the near-term relating to the sharp correction lower in risk assets over the last month which could temporarily delay the normalization process.” 

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