USDollar continues its bullish trend. Markets having been pricing in a potential rate hike in December following positive data out of the US this week leading up to NFP. The chance of a rate hike in December is currently sitting at 63% according to the Fed Watch Tool.
As per the live webinar with Wayne yesterday, looking at the NFP model we can see the following:
1. Weekly jobless claims: 249k vs 257k forecast
2. ISM Non-manufacturing Industry data employment sub component: 57.2 for September vs. 50.7 for August
3. ADP Employment report: 154k vs 166k
4. Challenger report: Job cuts increase of 38% to 44,324 for September
Taking job cuts into consideration we could see a headline number of around 155k. Keep an eye on the revised number from the previous month. Also pay careful attention to average hourly earnings. The FOMC are looking for wage growth – with the US economy almost at full employment the FOMC wants to see if the number of people employed are earning more money as this would be a positive leading indicator for an increase in inflation. More earnings means more spending which means more sales. More sales means more manufacturing and non-manufacturing. All of this leading to higher inflation. Remember, the FOMC is looking to achieve their 2% inflation target and any evidence that they are on the path towards that target could result in a higher chance of a rate hike. This is why it is important to pay attention to what Stanley Fischer says when he speaks later today. This NFP report is one of three that are coming out before the December meeting so America is not out of the woods just yet.
So all eyes on the NFP report out of America later today as well as a line up of FOMC speakers. Be sure to trade the NFP release live with Wayne McDonell at FXStreet. To register for the event go here.
Also pay careful attention to Stanley Fischer, speaking later today. Stanley Fischer is the Vice Chair of the FOMC and closely in tune with Yellen. If we see hawkish rhetoric, the market will respond accordingly.
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