Dollar Bulls had a great week last week – especially if they were swing trading. Comments out of the FOMC along with Trump’s testimony to congress saw the 10Y yield move back up to the top of its range bringing some very nice Yen weakness and Dollar strength into the market. With no NFP on Friday the markets were paying careful attention to Yellen who didn’t specifically say that March is live though did mention, and I quote, “at our meeting later this month, the Committee will evaluate whether employment and inflation are continuing to evolve in line with our expectations, in which case a further adjustment of the federal funds rate would likely be appropriate.” Currently the FOMC view the labor market as strengthening and they see inflation rising towards their 2% target. So that means all eyes on NFP next Friday.
Yellen also mentioned twice that scaling back accommodation will not be as slow as it was during the past couple of years though everything is data dependent. Taking a look at the FedWatch Tool the market is definitely pricing in a hike at the March meeting with the chance of a 75 – 100 bps hike sitting at 79.7% up significantly from the previous week. According to the Beige Book overall economic activity in all 12 districts has expanded at a modest to moderate pace with labor markets remaining tight in early 2017 and little change in pricing pressures. While we did not receive the headline number for NFP on Friday ISM Non-Manufacturing data on Friday came in better than expected with a reading of 57.6 vs. the expected 56.5 which was the same as Feb’s reading. We’ll get ADP, the challenger report and weekly jobless claims next week. Next Friday’s NFP is a biggie so make sure you trade that live with Wayne McDonell at FXStreet!