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US data continues to suggest a slowdown in momentum

By Ricky Bean September 8th, 2016

After disappointing payrolls numbers and weaker service sector activity there is a strong suspicion that Federal Open Market Committee (FOMC) will delay the forecasted year-end rate hike. The next FOMC meeting and press conference is due in just under a fortnight where we expect to see Federal Reserve Chair Yellen signpost to the market the committee’s intentions, hurdles and markers. As a result the US dollar is currently being data driven, with market participants interpreting each release to price their expectations accordingly.

Yesterday we had another reading on the employment sector in the form of the JOLTS data, this focuses on job openings/creation. The reading was better than expected and improved on the previous reading. Job openings surged to close to a record high, close to 5.9 million. This increase in job openings pushes ratio of unemployed workers per available job down to 1.3, the lowest level since 2001. The “quits” number was close to 3 million, remaining fairly constant in July as it did in June. The quits rate is views as a measure of confidence in the economy by gauging workers’ willingness or ability to leave jobs.

The monthly report is often eyed by Yellen as a key barometer of economic conditions. In light of the disappointing non-farm payrolls figure, this may be a relief to those concerned about the employment readings. As a result we saw the US dollar strengthen.

The day ahead is quiet in terms of economic data from the UK. However, all eyes will be on the ECB meeting today which could have an effect on the way the world largest currency pair (EURUSD) trades.