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US jobs report positive but Fed rate hike can still be delayed - BTMU

FXStreet (Łódź) - Lee Hardman, FX Analyst at the Bank of Tokyo Mitsubishi UFJ observes that the positive US NFP report for September could push the Fed to hike rates earlier in 2015, although headwinds remain such as subdued earnings growth, USD strength and lower commodity prices.

Key Quotes

"The US dollar has remained stronger in the Asian trading session following the release of the better than expected non-farm payrolls report on Friday. It prompted a broad-based US dollar rally lowering EUR/USD towards support at the 1.2500-level."

"The establishment report revealed that the US economy added 248k jobs in September and there were also upward revisions to prior months totaling 69k jobs. It lifted modestly the average number of jobs created per month so far in 2014 to a robust 227k, which is on course to be the strongest calendar year of job growth since 1999."

"The report strengthens the case for the Fed to begin raising rates earlier in 2015 although still subdued earnings growth, the ongoing strengthening of the US dollar and lower commodity prices are potentially creating some leeway for the Fed to delay raising rates."

"It may be partly why the US fixed income market was less responsive to the stronger than expected payrolls report. US yields increased only modestly with short-term yields having remained relatively stable over the past month."

"The deteriorating economic growth outlook overseas is reinforcing the relative appeal of the US dollar, and of US government debt which is helping to dampen upward pressure on US yields. The release of the latest TIGER (Brookings-FT Tracking Indices for the Global Economic Recovery) has signalled that the global recovery has stalled and become unbalanced, with the US now the sole major economy still showing signs of strength."

UK IP expected to grow 0.2% m/m in August, raising the y/y rate to 2.8% - RBS

Ross Walker, Senior UK economist at RBS suggests that UK Industrial production numbers for August, due out on Tuesday, should come in at 0.2% m/m and at 2.8% y/y, which would point to a 0.75% q/q growth for the sector in Q3.
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