The Dollar has suffered from yet another moment of sharp weakness before recovering its losses following the NFP headline figure being announced at an uninspiring 160,000. The headline job number is not only 40,000 below the median expectations, but it should finally put this ongoing idea around a possible US rate rise in June to bed, and the only reason why it has not completely as of yet is because average earnings were announced at a robust 2.5%.
Personally I still remain very unconvinced that the Federal Reserve will raise interest rates again in June and I am also suspicious that the two interest rate rises that the markets are currently talking about in 2016 could still be downgraded to just one. I believe that the headline job number at a disappointing 160,000 is very weak and will fail to convince voting members that it is still a wise idea to raise interest rates next month.
While I do admit the average earnings number is impressive and will please the Federal Reserve, we need these stronger earnings figures to actually translate into further expenditure and higher inflation pressures over a meaningful period of time for the Federal Reserve to feel confident enough in their economy to ignore the weaker headline jobs number. We are ultimately coming to the conclusion of a weaker period of economic growth for the US economy and prolonged ongoing concerns about the pace of global economic which is quite simply refusing to go away, and for this reason I still stand on the side of the argument that the Federal Reserve should not be raising US interest rates next month. For this reason I also believe that there is still further room for Dollar weakness in May, although it might not be at the same extreme levels that we have seen over the past couple of weeks.
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