Better-than-expected data and Fed Chair Yellen’s recent confirmation of a likely 2015 lift-off have supported the recent rebound in the USD. Data this week should maintain this momentum. Labour market data will be the key event on Friday. A 225k headline print is expected, broadly in line with the consensus forecast of 228k. Other data to look for include personal income and spending (Monday), Core PCE prices (Monday), ISM manufacturing (Monday), factory orders (Tuesday), ISM non-manufacturing index (Wednesday) and unit labor costs (Thursday). Barclays notes:
- We expect the tightening in labor markets to continue with the unemployment rate declining to 5.3% (consensus: 5.4%) and average hourly earnings rising 0.2% m/m (consensus: 0.2% m/m).
- We are in line with consensus on personal income (+0.3% m/m), factory orders (-0.2% m/m) and ISM non-manufacturing (57.0).
- We are above consensus for personal spending (+0.2% m/m; consensus: 0.1%) and slightly below consensus for ISM manufacturing (51.0; consensus: 52.0).
The market expects US unit labour costs to increase 6.0% q/q in Q1. The Fed’s Beige Book report (Wednesday) is also important and should describe an improving US economy after weather-related Q1 weakness.
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