8 Dec 2014
NFP report supports Fed rate hike expectations and stronger US dollar – BTMU
FXStreet (Barcelona) - Lee Hardman, Currency Analyst at Bank of Tokyo-Mitsubishi UFJ, notes that the strong than expected NFP print has supported the USD strength and prompted an increase in rate hike expectations among investors.
Key Quotes
“The US dollar has continued to strengthen in the Asian trading session following the release of the stronger than expected non-farm payroll report on Friday. US dollar strength has been most evident overnight against the G10 currencies of the Australian and New Zealand dollars, and the Asian currencies of the Malaysian ringgit and Indonesian rupiah.”
“The case for a stronger US dollar has been reinforced by the release of the non-farm payrolls report for November which has prompted an adjustment higher in short-term US yields. The yield on the two-year US Treasury bond has increased by around 0.12 percentage point from the low on Friday to 0.66% reaching its highest level since April 2011. The implied yield on the December 2015 Fed Fund futures contract has also increased by around 0.12 percentage point to 0.64%. The NFP report has prompted investors to increase Fed rate hikes expectations in the year ahead.”
“The establishment survey revealed a marked acceleration in employment growth which increased by 321k in November. Strong employment growth is continuing to result in the unemployment rate falling faster than the Fed has been expecting. The Fed is likely to revise lower again their projections for the unemployment rate at their next meeting on the 17th December.”
“Overall, the report supports the Fed’s own view that it remains on course to begin raising rates from around the middle of next year.”
Key Quotes
“The US dollar has continued to strengthen in the Asian trading session following the release of the stronger than expected non-farm payroll report on Friday. US dollar strength has been most evident overnight against the G10 currencies of the Australian and New Zealand dollars, and the Asian currencies of the Malaysian ringgit and Indonesian rupiah.”
“The case for a stronger US dollar has been reinforced by the release of the non-farm payrolls report for November which has prompted an adjustment higher in short-term US yields. The yield on the two-year US Treasury bond has increased by around 0.12 percentage point from the low on Friday to 0.66% reaching its highest level since April 2011. The implied yield on the December 2015 Fed Fund futures contract has also increased by around 0.12 percentage point to 0.64%. The NFP report has prompted investors to increase Fed rate hikes expectations in the year ahead.”
“The establishment survey revealed a marked acceleration in employment growth which increased by 321k in November. Strong employment growth is continuing to result in the unemployment rate falling faster than the Fed has been expecting. The Fed is likely to revise lower again their projections for the unemployment rate at their next meeting on the 17th December.”
“Overall, the report supports the Fed’s own view that it remains on course to begin raising rates from around the middle of next year.”