Any hesitation from Fed could see huge fallback in USD

5th December 2015 By: Ranko Berich

US non-farm payrolls – 04/12/15 

Today’s US non-farm payrolls report may not have been much better than expected, but should be good enough for the Fed, which has been clearly signaling its hopes to increase interest rates this year.

Despite the data being volatile month-to-month, non-farm payrolls have actually been growing at a fairly consistent rate for the last year. What’s most impressive is the clear upwards trend in wage growth, which shows that the labour market is indeed tightening as hoped for.

Although the Fed appears to be quite clear about its intentions to raise rates, this week’s ECB events should give some cause for caution. After all, the Fed could easily hike by less than 25 basis points, or simply decide to wait a little longer. Judging by how the euro reacted to this week’s events, if the Fed does fall even slightly short of the sky-high expectations it’s facing, we could see a large pullback in USD.