All eyes are focused towards the upcoming US Non Farm Payroll data which is due on Friday. The economic data released on Wednesday have shown strength as the ADP employment number has shown some signs of encouragements. The data came in at 182K while the forecast was for 183K. The reading for the previous month was at 190K.
However, the question which is faced by many investors is if this data can bite the US rate hike expectations. Unquestionably, what the number has done is that it has set a solid foundation for Friday’s upcoming number. The forecast for the US Non Farm Payroll number is 179K.
Miss Yellen was also speaking on Wednesday and she has anchored the rate hike expectations further. According to the Bloomberg survey, the odds of the fed raising the interest rate during the month of December are well above the 50 percent level. If the Friday’s number does show a solid gain it will anchor those expectations even more. The Fed chair women has reiterated today that although the Fed is ready to hike the interest rate, but they are still watching the economic data very closely.
If the final number is much better than the forecast on Friday, we are expecting the dollar to pick up some more steam. The strong dollar could also hurt the emerging markets as investors could start pulling out of their funds. However, on the flip side, if the data falls below the forecast, we could experience some profit taking for the dollar.