Wages

This was on the back of official data showing UK wage growth had reached its highest level since the financial crisis in the three months to August.

The markets were a little calmer in the first half of today’s session as the Turkish lira finally stopped falling, while the pound staged a short-lived bounce in the aftermath of mixed-bag UK data.

Most aspects of the US jobs data released on Friday morning disappointed expectations, but were unlikely disappointing enough to sway the Federal Reserve from its firm track towards higher interest rates through 2018 and beyond.

Monthly employment data will take center stage on Friday morning as the US Department of Labor will report on the number of jobs added to the US economy in April, the unemployment rate, and key wage growth figures.

For more than a week, the US dollar has risen sharply as US government bond yields have surged – with the benchmark 10-year Treasury yield briefly topping 3% – while geopolitical risk perceptions have tentatively waned.

Economic news in the UK was also not great today, although it wasn’t too bad either.

Two primary developments on Tuesday led to a sharp fall for the already-struggling US dollar.

The official US jobs report for February was released on Friday morning, and despite a stellar reading for job creation – 313,000 jobs added in February against prior expectations of around 200,000 – the data was mixed overall, as wage growth was weak and the unemployment rate was slightly higher than expected.

February US jobs data, which will be reported on Friday morning by the US Department of Labor, is poised to take on increased importance for markets and investors.

USD/CAD pulled back sharply from the key 1.3000 psychological level on Tuesday, ahead of Wednesday’s interest rate decision from the Bank of Canada and Friday’s employment reports from both the US and Canada.

Two primary catalysts for the return of sharply elevated market volatility emanated from the U.S. – Fed Chair Jerome Powell’s hawkish testimony in front of the US Congress, and US President Trump’s announcement regarding sizeable import tariffs on steel and aluminum.

The US dollar was still seeking direction while equity markets bounced back on Friday after a week of persistently volatile trading, as interest rates and Federal Reserve speculation continued to dominate headlines.

Aside from the release of meeting minutes from major central banks, including the US Federal Reserve and European Central Bank, this week also features key releases from the UK in the form of jobs data and inflation report hearings on Wednesday, as well as UK GDP on Thursday.

The official US jobs report for January that was released on Friday morning was highly positive, easily beating expectations on both the headline data and, very importantly, wage growth.

The first official US jobs data for 2018, covering January, will be reported on Friday morning by the US Department of Labor. Consensus expectations are pointing to an anticipated improvement in non-farm payrolls (NFP) over December’s disappointing outcome. Around 180,000 non-farm jobs are expected to have been added to the US economy in January following a worse-than-expected showing of 148,000 jobs added in December.

For the past week, all eyes have been on the World Economic Forum in Davos, Switzerland, where US President Trump and others moved markets, especially the US dollar, with their comments.

The official US jobs data for December will be reported on Friday morning by the US Department of Labor, and consensus expectations are pointing to a likely continuation of the strong job creation that prevailed through much of last year (September weather disruptions notwithstanding).

The US jobs report for November was released on Friday. Although the headline non-farm payrolls number came in significantly better than expected at 228,000 jobs added in November against a prior consensus forecast of around 200,000 jobs, wage growth turned out lower than expected.

Looking ahead this week, several key data releases will likely have a significant impact on AUD/USD.

On Friday, the official US jobs data for October will be reported, and expectations for a sharp bounce-back from September’s weather-related negative reading are high.

The week ahead will be an exceptionally busy one in terms of key macroeconomic events and data releases. Most importantly, the US Federal Reserve, Bank of England, and Bank of Japan will be announcing their respective monetary policy decisions. These decisions will then be followed by the highly anticipated US jobs report at the end of the week.

While last week’s highly disappointing US non-farm payrolls release was generally discounted by the markets due to the expected impact of two hurricanes that negatively affected US job growth in September, greater-than-expected wage growth and a lower unemployment rate were significant bright spots in the data. With respect to wage growth, a key indicator of inflation, average hourly earnings jumped up +0.5% in September against both a prior consensus forecast of +0.3% as well as the previous month’s +0.2% revised reading. This surprisingly elevated wage growth data is likely to play a role in boosting the prospects for a December interest rate hike by the Federal Reserve. The current week features more US economic releases that will also play a key role in helping to set the tone for both Fed policy and the US dollar going forward.