The big news from the January 2018 jobs report is the annual rise in wages: 2.9%. Salary rises have been drawn to the 2.5% level in the past year. Each time the report showed higher annual increases, the following month saw a disappointing figure and/or a downward revision. All In another case, the report of the accelerated rise in pay was skewed by the hurricanes.
This time may be different. The monthly rise of 0.3% came in as expected for the month of January. However, this is above the 0.2% levels which were the average. More importantly, this above-average monthly rise in January was accompanied by a much more than average rise for December: 0.4%.
The rise in wages has also managed to move the Fed’s biggest dove out of his nest: Minnesota Fed President Neel Kashkari said that if wage growth continues, it could impact rates. In December, Kashkari voted against the rate, and not for the first time.
The picture would have been brighter had the annual raise reached the round number of 3%. Nevertheless, the report has implications also at 2.9%. It is hard to see the incoming Fed Chair Jay Powell not raising rates in March. Moreover, there is a higher chance that the dot-plot of the Fed will consist of an upgrade from three to four rate hikes in 2018.
All in all, the rise in wages is very good news for the US dollar. The greenback made attempts to recover during the past week. This rise in wages could help boost these attempts and perhaps result in a turnaround.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
AUD/USD struggles near one-month low despite subdued USD demand
AUD/USD consolidates its recent heavy losses and seems vulnerable to sliding further amid worries about the slowing Chinese economy. Unexpected interest rate cuts by the People's Bank of China on Monday might also continue to undermine the China-proxy Aussie. Meanwhile, dovish Fed expectations keep the USD bulls on the defensive.
EUR/USD trapped below 1.09 as quiet Monday markets churn
EUR/USD churned on Monday just below 1.0900 as the new trading week kicks things off on a notably light note. Meaningful data remains limited for the first half of the trading week, leaving Fiber traders to shuffle in place as investors await Wednesday’s key PMI figures for both the EU and the US.
Gold price remains on the defensive below $2,400 mark, over one-week low
Gold price struggles to attract any meaningful buyers during the Asian session on Tuesday and languishes near a one-and-half-week low touched the previous day. Biden’s withdrawal from the US Presidential race and unexpected interest rate cuts by the People's Bank of China boosted the global risk sentiment on Monday.
SEC gives final approval for Ethereum ETFs to begin trading
The Securities and Exchange Commission approved the S-1 registration statements of spot Ethereum ETF issuers on Monday, making it the second digital asset ETF to go live in the US, according to the latest filings on its website.
Commodity FX gets no help from higher US equities
Markets were all over the place on Monday. US equities put in a decent recovery, though this did nothing to help beaten down commodity FX, with the Australian Dollar, New Zealand Dollar and Canadian Dollar all getting hammered.