Friday’s US Non-farm Payroll report came in considerably above expectations, with 335,000 jobs added in January. The December print was also revised higher, boosting the US dollar, and pushing treasury yields higher. The data suggests that a March interest rate cut is completely off the table, and this was further underlined in an interview with Fed Chairman Jerome Powell, which was recorded on Thursday and aired Sunday evening. Powell said that Americans may have to wait beyond March for the central bank to cut rates as officials look for more economic data to confirm that inflation is heading down towards 2%. The Chairman said that, “the danger of moving too soon is that the job’s not quite done, and that the really good readings we’ve had for the last six months somehow turn out not to be a true indicator of where inflation’s heading.”- With Friday’s employment report beating expectations, markets are now looking for the first cut from the Fed to come in May. We are unlikely to gain much of an insight from US data in the coming days, with very little on the docket this week. The ISM Services Index is out later today, with analysts looking for a small uptick from the previous reading of 50.5. Wednesday sees the release of the trade balance and weekly initial claims are out on Thursday.
EURUSD is back trading on a 1.07 handle, after dropping through support following Friday’s jobless report. It is a very quiet week for data out of Europe, with the only significant release coming on Wednesday, with the release of the German Industrial Production report for December. The print will offer some insight into the current state of Europe’s largest economy, which has so far just about managed to avoid a recession.
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