Signs point to strong labor market

3 February, 2017

The US jobs report for January is set to be released on Friday morning, just two days after the Federal Open Market Committee (FOMC) announced its decision to keep interest rates unchanged on Wednesday, as widely expected. In issuing its statement, the Fed once again noted that the labor market has continued to strengthen. Indeed, although the past several months of jobs reports have mostly fallen below consensus expectations, the data has still shown solid growth in US employment. January’s non-farm payrolls (NFP) could potentially show even better results, if other recently-released employment markers are to serve as any indication.

Because the closest FOMC meeting has just passed, the impact of Friday’s jobs report on financial markets is not likely to be as substantial as it would be if the Fed had an immediately upcoming rate decision. The next FOMC meeting is scheduled for mid-March. With that said, however, any substantial deviation from expectations in the jobs report could certainly help either boost or impede the Fed’s potential rate hike schedule this year. The more likely scenario on this particular Friday is that the jobs data exceeds forecasts, in which case the US dollar may finally receive some much-needed support after having fallen sharply since the beginning of the year. A better-than-expected NFP showing should likewise weigh on recently-rallying gold prices.

Markets are currently weighing the paths and interplay of both fiscal policy under the new Trump Administration along with monetary policy under the Fed. As usual, Friday’s jobs report will play a role in helping to determine the latter. In turn, the Fed’s future pace of monetary tightening and Trump’s economic policies going forward will continue to make a major impact across a broad array of financial markets.

President Trump has repeatedly stressed his strong focus on job retention and creation in the US. This promise follows on the heels of solid monthly employment increases throughout most of 2016, which highlight a healthy US employment landscape that helps support a more robust pace of interest rate increases by the Fed this year.

Last month’s data showing 156,000 jobs added for December fell short of expectations. As noted, however, while the past several months of non-farm payrolls data have also mostly disappointed forecasts, they have still shown a solid and stable US employment picture overall. After the Fed not only raised interest rates in December but also indicated that officials now expect three further rate hikes in 2017 instead of two, focus has turned to the pace of Fed tightening this year. Certainly, better-than-expected jobs data could help accelerate the process while worse data could very well impede it.


Source link  
Trump Inauguration Market Outlook

Friday, January 20, 2017 will mark the historic inauguration of what promises to be a highly unconventional US...

Will the Trump Rally extend beyond inauguration?

As the world continues to watch US President-Elect Donald Trump prepare for his January 20th inauguration, key financial markets....

Crude surges as non-OPEC producers agree oil output cut

Crude oil prices surged a huge $3 dollars or 5% higher at the Asian open with Brent briefly trading north of $57 and WTI above $54 a barrel before pulling back slightly...


Could oil end its 5-day losing run?

There are tentative signs that crude oil prices could bounce back today after falling for 5 consecutive and 9 in the past 11 days. As well as oil prices being oversold, bearish speculators may reduce their exposures ahead of the weekend...

Crude oil outlook worsens as US inventories soar

The bad news for crude oil began recently after doubts started emerging with regard to a proposed OPEC deal to cut oil production. Partly as a result of these doubts, crude oil prices for the past two weeks have virtually been in a state of free fall...

Market jitters abound ahead of Fed, Election

Key financial markets, most notably with respect to equities and the US dollar, have felt increasing pressure and heightened volatility in recent days as several primary risk events draw ever closer...


US Presidential Election: Final Debate Aftermath

With the dust having settled after Wednesday final US presidential debate of the 2016 campaign between Donald Trump and Hillary Clinton, the results have become rather apparent...

US Presidential Election: Potential Market Impacts

As of this writing, the current analysis of the electoral college map is predicting around 273 votes for Clinton against 186 for Trump, with 270 votes required to win the presidency...

US presidential debate moves unwind

The market’s initial response to the US presidential election debate overnight was a clear sigh of relief. The Mexican Peso, which had hit a record low against the dollar just the day before, surged higher, as too did the Canadian dollar...

  


Share: