FXStreet (Delhi) – Research Team at ANZ, suggests that the FOMC’s more upbeat October statement and subsequent comments from the likes of Chair Yellen had obviously left the door ajar to a December rate hike but the weekend’s labour market figures have surely swung it wide open.
Key Quotes
“The figures showed the largest monthly employment gain this year, the lowest unemployment rate since 2008 (although that was expected) and the strongest average earnings growth since 2009. The underemployment rate also fell. The figures give an unequivocally positive signal on the state of the US economy. If it is not at full employment, then it must be getting pretty close to it.”
“Moreover, with financial markets generally taking the prospects of higher rates pretty well (US equity markets were flat to modestly higher on Friday night), then this will give Fed officials further comfort that the time to begin ending emergency monetary policy settings is fast approaching.”
“Now to be fair, we shouldn’t forget that it was only a month ago that weak labour market figures had pushed expectations for hikes well into 2016. There were even calls for additional stimulus in some circles. With another payrolls report released before the Fed’s December decision, things could obviously all change again (labour market figures are somewhat of a lottery at times).”
“However, as we sit here today, the market is providing the Fed an easy choice with expectations for a hike now sitting close to 70%. In fact, if the tone of the data continues on this theme, the debate could quite quickly shift from the timing of the hike to the need for more tightening beyond that. From a local perspective, with all this taking some further pressure off the NZD, we believe these recent developments just allow the RBNZ more time to “watch and wait”.”
(Market News Provided by FXstreet)