Markets continued to digest the Federal Reserve’s rate decision and rhetoric of Wednesday evening as many economists’ are now forecasting a September rate hike as opposed to June/July, although this is still not completely off the cards yet. The Fed cited slowing growth in the winter months and the little change seen in labour underutilisation since the last meeting. The Fed have always focused on labour data regarding the raising of raising rates which is why we saw a boost in the greenback yesterday.
US unemployment claims declined last week to the lowest level in 15 years, signalling that employers view a Q1 slowdown in the economy is just temporary. US Jobless Claims declined by 34k to 262k exceeding expectations and sent the Dollar higher against most of its major counterparty’s. The positive labour data has boosted the markets view that rate could still rise this summer.
Today’s docket will be dominated by manufacturing data from America and the UK. In the morning, UK manufacturing PMI is released and forecast to improve slightly to 54.6, followed by US ISM manufacturing PMI in the afternoon where a slight improvement is also forecast. On other news, German, French and Italian banks will all be closed today in observance of Labor day, low liquidity in the Euro is therefore expected.
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