US data fails to provide 'ammunition to Fed doves'

Matthew Ryan, CFA Ebury

We saw two pieces of good news from the US economy last week. First, the delayed January payrolls reports showed much stronger job creation than expected, along with a downtick in unemployment and faster wage growth. Then, Friday's inflation report suggested that this reacceleration is not causing higher inflationary pressures, although the actual numbers remain above Federal Reserve targets.

Neither of these data points will provide much ammunition to the Fed doves, but we await the new chair nominee Warsh's confirmation hearings to gauge his impact on the balance of power within the institution. We remain mindful of the risks of institutional degradation and political pressure for lower rates and maintain a long-term bearish view of the Dollar.

Author

Matthew Ryan, CFA

Ebury

Matthew is Global Head of Market Strategy at FX specialist Ebury, where he has been part of the strategy team since 2014. He provides fundamental FX analysis for a wide range of G10 and emerging market currencies.

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