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Fed hike odds fall after weaker US jobs data, Rabobank says
Rabobank points to a -23,000 jobs print and a 37,000 downward revision to the June estimate as factors that reduce urgency for another September move.
Rabobank says odds for another Federal Reserve rate hike have been reassessed after weaker US employment data, citing a lower urgency despite the Fed staying data dependent, FXStreet reports. Bas van Geffen argues that weaker US Nonfarm Payrolls and a drop in labor supply have shifted the balance toward a more dovish interpretation of near term rate expectations.
FXStreet highlights that both hawkish and dovish camps at the Fed can find support in the latest figures, but the headline employment outcome reduced the case for a hike following Friday’s jobs report. Rabobank notes the payrolls number disappointed, with a -23,000 jobs print and a 37,000 downward revision to the June estimate, which could strengthen arguments from Fed doves.
Rabobank also emphasizes that upcoming inflation signals will remain crucial for the next rate call. It flags that incoming US CPI and inflation expectations could still determine whether the Fed revisits the question of another hike in September.
The report concludes that labor market data may have removed some urgency, but it is not a clear end to the possibility of further tightening, with inflation data still the deciding factor. FXStreet adds that markets will watch the next inflation read as the key input to rate expectations.