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The Last Market Focus Prior to March FOMC Meeting

Keep a very close on the crucial US labour market data (for Feb) due to be released this afternoon at 13:30 GMT. It will include non-farm payroll headline and revision figures, unemployment rate and average hourly earnings.

Apart from the significant non-farm payroll figure, we also need to pay attention to other labour market data to obtain a broader scope of the overall US labour market performance.

The US labour market data release for Feb is the last variation and market focus for a potential rate hike before the upcoming scheduled FOMC Mar 14-15 meeting.

Last week 7 out of 10 FOMC members made hawkish comments. Notably, the two Fed doves, Chair Yellen and FOMC permanent voting member Brainard, both made a hawkish speech.

The market expectations on a March rate hike have been largely priced in since February. Per the CME’s FedWatch tool: the current probability of a rate hike in March has jumped to 88.6%.

The average figure of non-farm payroll in the past 6 months has been around 189K, which is similar to the 190K estimate for Feb. If the upcoming NFP figure outperforms, or is in line with expectations, then we can expect a probable rate hike in March. However, if it is lower than 140K, then it will likely lower the probability of a rate hike.

Be aware that, according to past experience, the market trends sometimes reverse within 1-2 hours after the initial move.

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