5 Apr 2015
Fed: Rate hike in 2015 still likely - RBS
FXStreet (Bali) - Brian Daingerfield, FX Trading Strategist at RBS, shares his thoughts after the big miss of last Friday's US NFP, noting that a US rate hike is still likely in 2015.
Key Quotes
A softer-than-expected US employment report puts the prospects of the Fed gaining reasonable confidence that inflation will rise over time under challenge.
Still, there was certainly weakness in headline payroll gains but the wage inflation numbers looked better, meaning that how the Fed will view this report in their quest to gain “reasonable confidence” that inflation will rise over time remains unclear.
In a sense, this could create a similar frustration that followed prior reports that included strong headline gains and weak average hourly earnings.
At the same time, the trend of payrolls remains decent, and the 3mma of payrolls stands at 197K.
NY Fed President Dudley speaks on Monday and will likely be the first FOMC member to discuss the economic outlook in light of today’s number.
Potential transitory weather and the west coast port strike have had unknown impacts on the most recent data and there may be a bounce still to come, and as a result we think that a rate hike is still likely in 2015.
Definitive signs that the market is pricing a first rate cut out of 2016 may be the signal to re-engage USD longs.
Key Quotes
A softer-than-expected US employment report puts the prospects of the Fed gaining reasonable confidence that inflation will rise over time under challenge.
Still, there was certainly weakness in headline payroll gains but the wage inflation numbers looked better, meaning that how the Fed will view this report in their quest to gain “reasonable confidence” that inflation will rise over time remains unclear.
In a sense, this could create a similar frustration that followed prior reports that included strong headline gains and weak average hourly earnings.
At the same time, the trend of payrolls remains decent, and the 3mma of payrolls stands at 197K.
NY Fed President Dudley speaks on Monday and will likely be the first FOMC member to discuss the economic outlook in light of today’s number.
Potential transitory weather and the west coast port strike have had unknown impacts on the most recent data and there may be a bounce still to come, and as a result we think that a rate hike is still likely in 2015.
Definitive signs that the market is pricing a first rate cut out of 2016 may be the signal to re-engage USD longs.