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US jobs report eyed as Fed rate bets hinge on labour data
Markets are pricing roughly a 63.0% chance of a September rate hike, and the July jobs figures could affect that outlook.
Forexlive highlighted that this week’s US non-farm payrolls release is central to how traders may update expectations for Federal Reserve policy. The outlet noted the next FOMC meeting is not until September, giving markets time to scrutinize upcoming economic data before rates are set.
The July non-farm payrolls estimate is +80k, up from June’s +57k, with the unemployment rate expected to hold at 4.2%. Forexlive said traders will focus on whether any surprises in labour market data change the baseline for the Fed’s outlook.
According to Forexlive, traders are currently pricing about 63.0% odds of a rate hike for September. By year-end, it said at least one rate hike is priced in, with roughly 35 bps reflected, and by June next year around 50 bps of rate hikes are priced.
Forexlive also pointed to Credit Agricole as not expecting major deviations, saying the firm expects further stability in the labour market in July that would reinforce the current status quo. The outlet added that, absent an unusual set of numbers, it is unlikely to shift the Fed’s policy direction significantly.