NFP report could serve as decider for Fed

4 December,, Lagos – Another big day in the market as we have the all important job report from the US. This economic data is expected to be another key piece of the puzzle in deciding whether a December rate hike will go through or not.

With the European Central Bank’s action to cut deposit rate, leaving room for further maneuvering, the Euro was the star performer of the currency markets yesterday, soaring across board. However, Yellen’s speech did not do much to lift the dollar as she cautiously reiterated that the economy has signaled the criteria necessary for an interest-rate lift off have been met and that the tightening of monetary policy will go slow after the initial liftoff.

ECB extends quantitative easing

The ECB infused a range of packages into the market, in a bid to fight too-low inflation. This includes a cut in the floor for interest rates as well as an expansion of its bond-buying program by at least 360 billion euros ($390 billion). There was a reduction in the deposit rate by 10 basis points to minus 0.3 percent. The central bank also extended quantitative easing by six months, running till at least March 2017 at the current rate of 60 billion euros a month, and broaden the assets purchased to include local and regional debt. This left investors unimpressed, sending the Euro skyrocketing as much as 2.6 percent and equities and government bonds down, which signaled that Draghi’s measures fell short of expectations.

Canada employment and trade balance data (1:30 P.M GMT)

The country’s employment change, unemployment rate and trade balance figures will be released later today. No major surprises are expected here as the unemployment rate is forecast to remain at 7.00 percent, while the trade balance is also forecast to come at a 1.7B deficit, in line with last month’s figure. However, employment change is expected to come at -9.7k. It is notable to point that the actual release has often surpassed forecast in the last few months.

Non-farm payroll (1:30 P.M GMT)

The NFP report is expected to be a key decider for the Fed. The November employment data is forecast to show 200,000 non-farm payrolls and an unchanged unemployment rate of 5 percent, after October’s surprisingly strong 271,000 jobs. Wages are projected to rise 0.2 percent, after October’s unexpected 0.4 percent increase. A release like this will add to expectations of a December rate hike, as Fed chair Yellen has pointed the importance of watching upcoming data before the December 16 meeting.

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