020 7898 0500The Greenback has managed to claw back some of the losses made after the disappointing non-farm payroll numbers last week. This ultimately reduced the likelihood in many economists’ eyes of a rate hike later in the year. The US returned from a shortened week after Labour Day holidays, which is quite ironic as it is this week’s employment number that has renewed hope of an interest rate hike this year.
Positive labour numbers were released this week in the form of the JOLTS data (job openings) and the weekly jobless claims. 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. Meanwhile, jobless claims unexpectedly fell last week, pointing to sustained labour market strength. This is the 79th straight week that claims remained below the 300,000 threshold. A figure below the 300,000 mark is associated with robust labour market conditions. This is the longest stretch since 1970 that this has been reported. However, there is still evidence that the economy is losing momentum. The key ISM non-manufacturing figure disappointed. The data showed that the sector grew in August at its slowest pace since 2010, which puts question marks over the sustainability of growth and in turn the ability to raise rates. As a result, all eyes will be on Federal Reserve Chair Yellen as the FOMC deliver their press conference in a couple of weeks’ time for a signpost of future monetary policy.
The calendar is quiet today in terms of data so the focus will be on FOMC Member Rosengren as he speaks in Boston. The market will focus on the language used for any clues on future policy.
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