US futures are pointing to a lower open in light trade on Friday morning, as traders await the latest data on the US labour market and gear up for the first rate hike of 2016 from the Federal Reserve.
While the November jobs report is not necessarily being talked about with the same importance as some in the past, due to a rate hike being almost 100% priced in next week, it continues to be an extremely important economic release and should not therefore be overlooked. It’s very unlikely that today’s numbers will have any influence on the decision in a couple of weeks, not if recent commentary from the Fed is anything to go by, but it along with others will influence the pace of tightening next year and beyond.
A weak report for November once again sews the seeds of doubt that has prevented the Fed from raising four times this year, as was planned a year ago. The last few years have started with some disappointing numbers that have given voice to the economic doubters and those calling for the Fed to abandon its tightening plans and if we start a little earlier this time around, we could be waiting another year to see interest rates at 1%, something the markets are already not far from pricing in.
As it stands, markets are pricing in only one hike between now and next November, which doesn’t exactly indicate much faith in the central bank’s ability to tighten as it would like again. If we continue to see falling unemployment, solid job creation and, most importantly, stronger wage growth, the Fed will have no choice but to raise rates at a faster pace and markets will respond. It’s the stuttering recovery that forces investors to doubt the Fed.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities.
Opinions are the authors — not necessarily OANDA’s, its officers or directors. OANDA’s Terms of Use and Privacy Policy apply. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Recommended Content
Editors’ Picks
EUR/USD steady below 1.0800 after US PCE meets expectations
EUR/USD remains depressed below 1.0800 after soft French inflation data, amid minimal volatility and thin liquidity on Good Friday. The pair barely reacted to US PCE inflation data, with the Greenback shedding some pips. Fed Chair Jerome Powell set to speak ahead of the weekly close.
GBP/USD hovers around 1.2620 in dull trading
GBP/USD trades sideways above 1.2600 amid a widespread holiday restraining action across financial markets. Investors took a long weekend ahead of critical United States employment data next week. Fed Chair Powell coming up next.
Gold price sits at all-time highs above $2,230
Gold price holds near a fresh all-time high at $2,236 in thinned trading amid the Easter Holiday. Most major world markets remain closed, although the United States published core PCE inflation, the Federal Reserve’s favorite inflation gauge.
Jito price could hit $6 as JTO coils up inside this bullish pattern
Jito (JTO) price has been on an uptrend since forming a local bottom in early January. Since then, JTO has revisited the key swing point formed in early December, suggesting the bulls’ intention to move higher.
Key events in developed markets next week
Next week, the main focus will be inflation and the labour market in the Eurozone. We expect services inflation to be impacted by the easter effect, while the unemployment rate to be unchanged.