Evolution of wages “key number” within Friday's US labour report

Matthew Ryan, CFA Ebury

The relentless rise in interest rates as prospects for generous Federal Reserve cuts diminish will be tested this Friday by the latest US labour market report.

High frequency jobs indicators, such as the weekly jobless benefit claims, show no signs of deterioration, and we expect another month of solid, albeit unspectacular, job creation.

The key number in our view will be the evolution of wages.

These have grown for the last few months at a monthly pace of 0.4%, nearly 5% in annualised terms. However, with just one-and-a-half 25bp cuts priced in for all of 2025, a lot of US economic strength, and inflationary pressures, is already in the price of an extremely expensive US Dollar. For this reason, we could see a sharp pullback in response to any data disappointment out of the US.

Author

Matthew Ryan, CFA

Ebury

Matthew is Global Head of Market Strategy at FX specialist Ebury, where he has been part of the strategy team since 2014. He provides fundamental FX analysis for a wide range of G10 and emerging market currencies.

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