US NFP: Final green light for the Fed to lift rates once again - ANZ

In view of the analysts at ANZ, the US jobs report would have had to have been an absolute shocker to derail prospects for a Fed rate hike this week but it wasn’t, (in fact it was pretty good across the board) and so serves as the final green light for the Fed to lift rates once again.

Key Quotes

“US jobs rose 235k in February versus an upwardly revised 238k the month before. The three-month average is now back up at 210k. Average earnings rose 2.8% y/y and the January data was revised up from 2.5% to 2.6% y/y. The unemployment rate fell to 4.7%, the participation rate ticked up 0.1%pts to 63.0% and the broader US measure of labour market slack fell to 9.2% vs 9.4%. In other words, everything in the report was strong.”

“With pricing effectively there, the focus will be on whether FOMC members adjust the median dot plot higher. This is particularly relevant for near-term USD direction. Many Fed speakers have recently said that the risks to the growth outlook are to the upside and it will be interesting to see what, if any, tweaks to economic forecasts and forward guidance are made. There have been hints from the Fed that the pace of anticipated rises may need to pick up, so the question markets will be hoping to answer is what does “gradual” now mean?”