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    NFP: norm and abnormality

    Non-Farm payrolls report, released in the US on Friday, didn’t meet my expectations, which I’d posted the day before the publication. The number of new jobs, created in April, wasn’t higher than expected by the forecasts, and March data were revised down instead of up.

    However, after Friday’s report, I grew even more convinced that weak March data was a kind of abnormality. The April level – 223 thousand new jobs – is quite a decent figure. Against this background, the March 85 K look like a deviation.

    But other my prediction did come true – on 21 October, I projected the US unemployment rate to decline to 5.5% level in March 2015th. That is exactly what happened. And in April, as we found out on Friday, unemployment fell to 5.4% – the level of May 2008.

    So, I wouldn’t consider recent NFP reports as a weighty argument in favor of Fed’s abandoning the idea of raising rates this year.

    Yes, in recent years, many of the Federal Reserve leaders say that the “natural” unemployment rate has shifted below 5.5% and is now at 5.0%. The recovery of the US labor market has not reached this mark yet. But the degree of approximation to the level shows that my prediction expecting unemployment to reach 5.0% in January 2016 is likely to come true. The proximity of desirable target allows the Fed to make its first rate hike in autumn, especially since the correction of the key rate by 25 basis points would not deprive the US monetary policy of incentive.

     

    Dear traders, please post your comments to our forecasts and share your own opinion. Your ideas can be very helpful for the newcomers in the forex market. Thank you!

    Non-Farm payrolls report, released in the US on Friday, didn’t meet my expectations, which I’d posted the day before the publication. The number of new jobs, created in April, wasn’t higher than expected by the forecasts, and March data were revised down instead of up.

    However, after Friday’s report, I grew even more convinced that weak March data was a kind of abnormality. The April level – 223 thousand new jobs – is quite a decent figure. Against this background, the March 85 K look like a deviation.

    But other my prediction did come true – on 21 October, I projected the US unemployment rate to decline to 5.5% level in March 2015th. That is exactly what happened. And in April, as we found out on Friday, unemployment fell to 5.4% – the level of May 2008.

    So, I wouldn’t consider recent NFP reports as a weighty argument in favor of Fed’s abandoning the idea of raising rates this year.

    Yes, in recent years, many of the Federal Reserve leaders say that the “natural” unemployment rate has shifted below 5.5% and is now at 5.0%. The recovery of the US labor market has not reached this mark yet. But the degree of approximation to the level shows that my prediction expecting unemployment to reach 5.0% in January 2016 is likely to come true. The proximity of desirable target allows the Fed to make its first rate hike in autumn, especially since the correction of the key rate by 25 basis points would not deprive the US monetary policy of incentive.

     

    Dear traders, please post your comments to our forecasts and share your own opinion. Your ideas can be very helpful for the newcomers in the forex market. Thank you!


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