Friday’s NFP report showed 228k growth in jobs in November, above expectation of 200k, while the previous month’s figure was revised down to 244k from 261k. The headline unemployment rate was unchanged at 4.1%, as expected, but the main focus was on the average hourly earnings, which only rose 0.2% mm, below expectation of 0.3% mm, causing a mixed reaction to the US$ which remained firm against the Yen, Aud and Sterling but gave up a little ground elsewhere. The other main action on Friday was in Sterling, which headed sharply lower despite the breakthrough between the EU/UK over the outlines of the Brexit divorce talks.
In other markets, US stocks headed about 0.4% higher after the US data, while the metals were held in fairly tight ranges and WTI headed a little higher on the back of stronger Chinese demand.
Note that the Chinese November CPI came in at 1.6% on Saturday, slightly below expectations of 1.7%, and may impact on the Aud$ today.
Although it will be a quiet start to the week in terms of data, we will get a 24 hour period on Wed/Thur when Interest Rate Decisions will be forthcoming from the US, UK, Switzerland and the EU, and they will override everything else. There is plenty of other data to be released though, including the Australian MYEFO, the EU ZEW and UK CPI (Tue), UK Unemployment figures and German & US CPI (Wed), Australian, China Retail Sales, EU/U ) flash PMIs, UK & US Retail Sales (Thur) and the Japan Tankan and US Industrial Production & Capacity Utilisation (Fri).
The main focus will be in the Fed, who are widely expected to hike by 25bp, and it will be the statement, dot-plot, forecasts and Janet Yellen’s press conference that will guide the price action. The last dot-plot indicated the Fed was on track to hike rates three more time in 2018 although the market is currently pricing in less than two 25bp hikes. Most analysts believe the Fed will keep the dot plots largely in line with the previous result but there are some looking at the possibility that the Fed may be a bit more aggressive due to the ongoing jobs growth and the growing possibility of fiscal stimulus emanating from the Republican tax plan.
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