US futures Lower Ahead of US Jobs Data

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 for this month, 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.

Trump Effect Wont be Beat by NFP

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.

USD/JPY – Yen Subdued as Markets Eye US Payrolls, Wage Growth

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NFP

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Craig Erlam
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.