9 Mar 2015
Strong US jobs but few tangible signs of wage pressure - RBS
FXStreet (Bali) - As RBS FX Strategists note, the US employment report leaves the Fed with a very strong jobs market but few tangible signs of a pickup in wage pressure.
Key Quotes
"The February employment data was stronger than expected in terms of headline employment gains but wage growth once again underwhelmed, with the y/y rate of average hourly earnings growth slipping from 2.2% to 2.0%."
"The employment report leaves the Fed in the same bind that it has found itself in for months - a very strong jobs market but few tangible signs of a pickup in wage pressure."
"Importantly, the core PCE deflator for January released this week held steady at 1.3% y/y and market-based measures of inflation expectations have rebounded off the lows, which may add to the sense of reasonable confidence in a future rise in inflation."
"The March U of Michigan survey this week may show survey measures of inflation expectations holding steady. The employment data leave us confident that the Fed will remove the patient guidance from its March statement, formally completing the shift away from forward guidance and to full data dependence, and continue to take a relatively hawkish tone."
"This monetary policy divergence narrative still has scope to drive USD gains – we expect EUR/USD to continue to push to new lows. JPY seasonal weakness seen over the past 6 years in March is a strong seasonal trend and that may lead to renewed interest in USD/JPY upside."
Key Quotes
"The February employment data was stronger than expected in terms of headline employment gains but wage growth once again underwhelmed, with the y/y rate of average hourly earnings growth slipping from 2.2% to 2.0%."
"The employment report leaves the Fed in the same bind that it has found itself in for months - a very strong jobs market but few tangible signs of a pickup in wage pressure."
"Importantly, the core PCE deflator for January released this week held steady at 1.3% y/y and market-based measures of inflation expectations have rebounded off the lows, which may add to the sense of reasonable confidence in a future rise in inflation."
"The March U of Michigan survey this week may show survey measures of inflation expectations holding steady. The employment data leave us confident that the Fed will remove the patient guidance from its March statement, formally completing the shift away from forward guidance and to full data dependence, and continue to take a relatively hawkish tone."
"This monetary policy divergence narrative still has scope to drive USD gains – we expect EUR/USD to continue to push to new lows. JPY seasonal weakness seen over the past 6 years in March is a strong seasonal trend and that may lead to renewed interest in USD/JPY upside."