6 Mar 2015
US NFP results key for the FOMC - BTMU
FXStreet (Barcelona) - Derek Halpenny, European Head of GMR at Bank of Tokyo-Mitsubishi UFJ, views that today’s US payrolls data could shape up Fed’s thinking in the near-term.
Key Quotes
“While we have well-known dove Charles Evans calling for a delay in rates hikes until 2016, we would place a lot more weight on the comments from San Francisco Fed President Williams (voter this year) who stated yesterday that there would be a “serious discussion” about raising interest rates around mid-year.”
“Coming from the same Fed bank as Chair Yellen, his views may be more reflective of what Chair Yellen is currently thinking.”
“Of course, what will be crucial over whether “patient” is dropped from the statement and whether we do get a rate increase by mid-year is the state of the labour market. Today’s non-farm payrolls data should confirm a still healthy jobs market with only a moderate slowdown from the 257k gain recorded in January.”
“However, 1mn jobs have been created in the last three months and more subdued growth could be evident today.”
“The cold weather snap and the west coast port strike, which was mentioned in the ISM report, may also undermine the jobs number. Still, the estimates of spare capacity in the labour market that we monitor continue to point to wage pressures building and the annual average wage growth picking up further over the coming months.”
“If we get a sub-200k NFP figure today but the wage data continues to accelerate that to us would be the far more important element of the report in terms of shaping the monetary policy outlook.”
“A favourable report should result in a greater reaction in short-term rates in the US given the importance of today’s report in shaping Fed thinking over the near-term. The dollar is likely to remain well supported.”
Key Quotes
“While we have well-known dove Charles Evans calling for a delay in rates hikes until 2016, we would place a lot more weight on the comments from San Francisco Fed President Williams (voter this year) who stated yesterday that there would be a “serious discussion” about raising interest rates around mid-year.”
“Coming from the same Fed bank as Chair Yellen, his views may be more reflective of what Chair Yellen is currently thinking.”
“Of course, what will be crucial over whether “patient” is dropped from the statement and whether we do get a rate increase by mid-year is the state of the labour market. Today’s non-farm payrolls data should confirm a still healthy jobs market with only a moderate slowdown from the 257k gain recorded in January.”
“However, 1mn jobs have been created in the last three months and more subdued growth could be evident today.”
“The cold weather snap and the west coast port strike, which was mentioned in the ISM report, may also undermine the jobs number. Still, the estimates of spare capacity in the labour market that we monitor continue to point to wage pressures building and the annual average wage growth picking up further over the coming months.”
“If we get a sub-200k NFP figure today but the wage data continues to accelerate that to us would be the far more important element of the report in terms of shaping the monetary policy outlook.”
“A favourable report should result in a greater reaction in short-term rates in the US given the importance of today’s report in shaping Fed thinking over the near-term. The dollar is likely to remain well supported.”