|

Fed: Wait-and-see stance after weak jobs – Commerzbank

Commerzbank Senior Economist Dr. Christoph Balz notes that US employment fell by 92,000 in February, far below expectations, with revisions also lowering prior months. He highlights possible distortions from a strike and cold weather. Balz expects the US Federal Reserve to keep interest rates unchanged at upcoming meetings as it waits for clearer labor market and inflation signals.

Weak jobs data delays Fed action

"The US employment report was a big letdown in February, with 92,000 jobs lost. But some one-off factors, like a strike and the cold snap, might have played a role. That makes it harder to interpret the numbers."

"In addition, revisions pushed data for earlier months down by a combined 69,000. The unemployment rate is now 4.4% after 4.3%. Average hourly earnings rose by 0.4% in February compared with the previous month and by 3.8% compared with the previous year. In January, the year-on-year rate was 3.7%."

"Today's data is likely to trigger renewed concerns about the labor market at the US Federal Reserve. However, due to possible one-off factors and in view of the fluctuations in recent months, the Fed will interpret the figures with caution and wait for further reports before adjusting its assessments."

"The unclear impact of the Iran war, especially on inflation, also argues in favor of a wait-and-see approach."

"The last two meetings of the Powell era this month and at the end of April are likely to proceed without any interest rate changes. However, the Fed may soon face some difficult decisions in view of the downside risks in the labor market and increasing inflationary pressures."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Author

FXStreet Insights Team

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

More from FXStreet Insights Team
Share:

Editor's Picks

EUR/USD climbs above 1.1600 on US–Iran peace breakthrough

The EUR/USD pair stays firm above 1.1600 in the European session on Monday. The US and Iran have reached a deal to reopen the Strait of Hormuz on Sunday, which underpins risk sentiment, supporting the Euro against the US Dollar. Now, the main focus this week remains on the Fed policy decision due on Wednesday.

GBP/USD: US-Iran reaches deal supporting advance beyond 20-day EMA

The GBP/USD pair trades 0.35% higher to near 1.3460 during the late Asian trading session. The Cable extends its week-long advance as market sentiment improves further, following the announcement that the United States and Iran have reached a deal.

Gold gains momentum as US, Iran announce a peace deal

Gold price rises to a weekly high during the early European trading hours on Monday. The precious metal rebounds after the United States and Iran had reached a deal to end their conflict, easing concerns about inflation and higher interest rates.


Bitcoin consolidates gains, Ethereum defends support, XRP nears breakout trigger


Bitcoin, Ethereum and Ripple begin the week on a constructive note as the top three cryptocurrencies attempt to extend rebounds after recovering nearly 4%, 2% and 2.6%, respectively. BTC steadies around $65,600, ETH continues to hold firmly above the key $1,700 support, while XRP nears the upper boundary of the falling channel pattern. 

President Trump announced that the deal with Iran is complete
President Trump announced that the deal with Iran is complete and he authorises the toll-free opening of the Strait of Hormuz and removal of the US Naval blockade. While the agreement is made, it is expected to be signed on Friday to take effect. The Forex market looks stable and could react slowly to the positivity around the news as Iran still expresses its mistrust on the US.
4.2% headline, 0.2% core: Why the Fed's next hike may be targeting the wrong problem

May's CPI put headline inflation at 4.2% on the year, up from 3.8% in April and the hottest reading since April 2023, while core prices rose just 0.2% on the month, undershooting the 0.3% consensus and halving April's pace.