- Initial jobless claims down again despite higher unemployment rate and lower non-farm payrolls
- Is the US ready for an interest rate hike?
- GBPUSD continue their downward trend – 1.33281
Mixed economic data but is the US economy in good health
The US economy took a slight negative turn last week, Non-Farms were down on expectations and unemployment rates were slightly up. However initial jobless claims have been down for two consecutive weeks with the labour force pulling their weight. Unit labour costs were significantly up highlighting the potential for wage increases and positive inflation.
Whilst non-manufacturing PMI took a turn for the worse its impact on GDP is marginal in comparison to the manufacturing PMI, but this is not necessarily what Yellen is looking for when it comes to a FED interest rate raise.
Is the FED ready for an interest rate raise?
There are many that hold the view the FED will likely hold off on a rate hike this year, recent economic activity tells me otherwise. Yellen is very hot on employment rates, the Non farm payrolls last Friday whilst below expectations, still projected healthy levels of job growth. The Labour cost improvements hint at further signs of wage growth in the US, and as we are met now with three consecutive releases of lower jobless claims, I am of the opinion that the FED are inching towards an interest rate raise in December.
This of course, would be the first interest rate raise promised since the previous December – which was when Yellen originally promised 4 hikes in 2016.
With the above in mind, whilst the US elections are likely to cause market volatility a rate hike from the FED could have significant implications for your US Dollar buying requirements. There is still a possibility that the FED could raise rates in September, however;
-If the FED do not raise rates in September, there could be a window of opportunity between the US elections and the next interest rate decision in December.
-The outcome of the US presidential Elections could impact the FED’s decision, especially given the wildcard Trump who has limited experience in a political environment and could make markets nervous.
Bare the above in mind when making a timed currency transfer.