Back
9 Feb 2015
US Jobs, wages boost Fed lift-off expectations – TDS
FXStreet (Barcelona) - Shaun Osborne, Chief FX Strategist at TD Securities, notes that the strong US Jobs and wages have boosted Fed rate hike expectations, further expecting USD’s gains to extend in the months ahead as markets await the rate lift-off.
Key Quotes
“Friday’s US Non-farm payroll data came in above expectations, with upward revisions to the back data (the strongest three-month gain in 17 years, according the Bloomberg) and with the added benefit of a meaningful push up in hourly earnings—a trifecta of developments which will be music to the ears of the FOMC. US yields pushed higher and the USD followed suit fairly quickly.”
“The onus is shifting to the data having make the case for the Fed not to move rates up in the next few months and investors will pay attention to wide/widening yield spreads in the USD’s favour, especially versus currencies where the central bank is easing or where rates are near zero.”
“The USD swing higher should extend in the months ahead as the Fed nears rate lift off.”
“We look for the Fed to modify its communication strategy further in this vein in March (by dropping “patient” from its policy statement) and Fed Chair Yellen should stay on message with regard to rate lift off at the congressional testimony she is due to deliver before the end of the month (no date set yet).”
“US data disappointing through H1 (in the way that is has done every year since 2010) was perhaps the biggest risk in our near-term outlook for the markets; strong employment data suggests we might just skirt the “spring swoon/soft patch/polar vortex” issue this year.”
“Investors may have to recalibrate their own expectations regarding the likelihood of Fed rate increases occurring sooner rather than later.”
Key Quotes
“Friday’s US Non-farm payroll data came in above expectations, with upward revisions to the back data (the strongest three-month gain in 17 years, according the Bloomberg) and with the added benefit of a meaningful push up in hourly earnings—a trifecta of developments which will be music to the ears of the FOMC. US yields pushed higher and the USD followed suit fairly quickly.”
“The onus is shifting to the data having make the case for the Fed not to move rates up in the next few months and investors will pay attention to wide/widening yield spreads in the USD’s favour, especially versus currencies where the central bank is easing or where rates are near zero.”
“The USD swing higher should extend in the months ahead as the Fed nears rate lift off.”
“We look for the Fed to modify its communication strategy further in this vein in March (by dropping “patient” from its policy statement) and Fed Chair Yellen should stay on message with regard to rate lift off at the congressional testimony she is due to deliver before the end of the month (no date set yet).”
“US data disappointing through H1 (in the way that is has done every year since 2010) was perhaps the biggest risk in our near-term outlook for the markets; strong employment data suggests we might just skirt the “spring swoon/soft patch/polar vortex” issue this year.”
“Investors may have to recalibrate their own expectations regarding the likelihood of Fed rate increases occurring sooner rather than later.”