Yesterday, with the release of the minutes from the March meeting, traders had a bit more information about where officials stand on the pace of tightening this year (2 more rate hikes should be expected this year) and how the central bank plans to manage billions of dollars in assets it purchased after the financial crisis. So, the federal funds rate isn’t anymore the only thing on the committee’s agenda – and what traders should watch, as FOMC members brought up the FED balance sheet. As long as economic conditions continue to improve, the FED will raise interest rates and may also change its reinvestment policy later this year.
The USD was down after the release of the FOMC minutes and the American currency is now waiting for the job report for the month of March.
The job report gives information about how many American jobs in the non-agricultural sector were created compared to the previous month, the industries that created or destroyed more jobs, the unemployment rate, overall wage growth, and much more. Thus, the report provides extensive information on how the US economy is evolving and in what direction it is going.
This report includes different surveys that give a vision of the strength/weakness of the employment situation in the United States. Therefore, it helps traders to have an idea of the strength of the US economy, and to know how American consumers are going to spend their money, and if companies plan on investing or hiring, which also contributes to support the American growth.
The NFP report takes into account nearly 80% of the country’s workforce. If the report is positive, it means that more people have a job and therefore receive a salary, encouraging consumer spending – the main factor in US growth (more than 60% of GDP). Similarly, if employment increases it means that businesses face greater labor needs, as they have more orders and/or are more confident in the future of their business.
Analysing this report helps investors understand how healthy the American economy is, and especially how it can influence the FOMC’s decisions about its monetary policy. The FED has 2 main objectives: full employment (the unemployment target rate is 4.8%) andstable inflation (PCE indicator at 2%), so this report is important market moving news – as it impacts all asset classes.
Everything is here about how investors’ expectations about FED’s future decisions shape the market. Mid-March, the decision of the FED to raise interest rates was the 2nd such hike since the election of President Trump last November. The decision, widely seen as a reflection of growing confidence in the U.S. economy: the federal funds rate is now fluctuating between 0.75% and 1%.
The USD was down after the release of the FOMC minutes and the American currency is now waiting for the job report for the month of March.
The job report gives information about how many American jobs in the non-agricultural sector were created compared to the previous month, the industries that created or destroyed more jobs, the unemployment rate, overall wage growth, and much more. Thus, the report provides extensive information on how the US economy is evolving and in what direction it is going.
This report includes different surveys that give a vision of the strength/weakness of the employment situation in the United States. Therefore, it helps traders to have an idea of the strength of the US economy, and to know how American consumers are going to spend their money, and if companies plan on investing or hiring, which also contributes to support the American growth.
The NFP report takes into account nearly 80% of the country’s workforce. If the report is positive, it means that more people have a job and therefore receive a salary, encouraging consumer spending – the main factor in US growth (more than 60% of GDP). Similarly, if employment increases it means that businesses face greater labor needs, as they have more orders and/or are more confident in the future of their business.
Analysing this report helps investors understand how healthy the American economy is, and especially how it can influence the FOMC’s decisions about its monetary policy. The FED has 2 main objectives: full employment (the unemployment target rate is 4.8%) andstable inflation (PCE indicator at 2%), so this report is important market moving news – as it impacts all asset classes.
Everything is here about how investors’ expectations about FED’s future decisions shape the market. Mid-March, the decision of the FED to raise interest rates was the 2nd such hike since the election of President Trump last November. The decision, widely seen as a reflection of growing confidence in the U.S. economy: the federal funds rate is now fluctuating between 0.75% and 1%.
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