What’s better than NFP week? That’s right, NFP week that’s also FOMC week! Here’s what you can expect from the events.
FOMC statement and presser (May 1, 7:00 pm GMT)
While traders had already expected the FOMC gang to repeat their plans to slow down the pace of their tightening in last month’s meeting, they didn’t expect that policymakers would hint at not raising rates AT ALL this year.
Governor Powell and his team also downgraded their GDP estimates, saying that growth has “slowed from its sold rate in the fourth quarter” instead of “rising at a solid rate” as they said in their previous meeting.
Not surprisingly, the more-dovish-than-expected FOMC statement dragged the Greenback lower against its counterparts during the release.
On Wednesday the Fed is widely expected to keep its policies steady for another month in April. What could make the event volatile are hints of a possible rate cut.
Can FOMC members really jump from being hawkish to actively considering a rate cut in a span of a few months? After all, improvements in Uncle Sam’s latest data and downside risks such as trade war and Brexit should convince Fed members to be more confident in their growth estimates.
If Powell chooses to focus on the central bank’s inflation goals, however, then the next couple of meetings are still fair game for the doves.
Don’t worry, it looks like FOMC members will have a chance to tell us more about whatever they decide on. Aside from the presser that will follow the statements, members like Evans, Clarida, Williams, and Bullard all have scheduled appearances on Friday.
Watch out for hints that the Fed is actively considering easing in the foreseeable future!
Once the dust has settled around the Fed’s decision, market players will focus on NFP-related reports.
In case you were too busy watching #Endgame theories last month, you should know that the U.S. job market added a net of 196,000 jobs in March, much stronger than the expected 180,000 figure and February’s 33,00 addition. The unemployment rate held steady at 3.8%, while the labor force participation rate slipped 0.2% to 63.0%.
The mixed results did little for the dollar, which also dealt with Trump pushing for monetary easing.
To get clues on Friday’s NFP report, you should watch out for the leading indicators coming up this week. The ADP report (May 1, 1:15 pm GMT), for starters, is expected to improve from 129K to 181K for the month.
The employment component of ISM’s manufacturing PMI (May 1, 3:00 pm GMT) might be a drag since the index is expected to slip from 55.3 to 55.0. Meanwhile, the Challenger job cuts (May 2, 12:30 pm GMT) and weekly unemployment claims (May 2, 1:30 pm GMT) aren’t expected to make significant revisions from their previous readings.
This week analysts expect to see a net addition of 188,000 for the month of April. The unemployment rate is expected to remain at 3.8%, while participation rate could edge lower to 62.9%.
Keep close tabs on average hourly earnings, which should hint at the impact of the latest job additions to the consumers’ spending power.
Missed last week’s price action? Read USD’s price recap for April 22 – 26!