This week will be very important for the US dollar. The speech by Fed chief Janet Yellen today and Nonfarm Payrolls data release on Friday can greatly affect the investors' expectations from the meeting of the Federal Reserve in June.
At this point, the market assesses the likelihood of the Fed raising rates in April to 6%, and in the beginning of summer to 36%. Despite the fact that expectations about the June meeting look a little too high, these figures show that investors do not think interest rates will rise in the second quarter.
At the same time, all that officials say indicates that the actual increase in the Fed's policy is already very close. Some prominent economists believe that rates have all chances to be increased at the beginning of April. Therefore, although at the last meeting of the Fed's Janet Yellen’s speech sounded softer than usual, she has the opportunity to take a more strict position during today's speech.
Friday's report on the labor market can breathe extra life into the dollar, if the income figures improved after a sudden drop a month ago. Yet, if the rhetoric of Yellen will remain soft, and indicators on the labor market will be low, the players can "punish" the dollar and eliminate the possibility of tighter Fed policy at the beginning of June.
As for the data, we inclined to predict the good data in the 205K area, which is slightly less than excellent performance last month of 242K.
Published yesterday releases on trade balance, consumer spending and prices underscored that the United States economy is still experiencing problems. Although the profit of individuals increased more than expected, expenses increased by only 0.1%.
What Do Others Think?
Economists of BNP Paribas expect the US economy added 210,000 jobs in March, down from the 242,000 added in February but another month in which the US labor market continues to be a pillar of strength in the economy.
"The consensus has tended to overestimate March payrolls over the past six years.
We expect a payroll print for March of about 180k, down from 242k in February, and below the current three-month average of 228k." experts said.