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Your weekly fundamental view (Aug 29-Sep 2)

August 29, 2016 16:00


Need to know

During the annual Jackson Hole event last week, FED chair J. Yellen indicated that a rate hike could still be coming this year. The main driver for the rate decision is based on the upcoming employment and economic data. This week's main focus is therefore US employment data including ADP employment change, unemployment claims and Non Farm Payroll (NFP) figures.

Coming up

ADP figures released Wednesday 31 August. The ADP provides payroll services to US corporations. Their analysis estimates employment growth which is based on data from around 400,000 customers. Previous data shows 179k vs 173k forecast for this week. Why should traders care? The ADP provides an early indication of what traders can expect from this Friday's NFP release.

US unemployment claims out Thursday 1 September. This data indicates the number of individuals who filed for unemployment insurance over the past week. It provides an insight to overall economic health, because labour-market conditions impact consumer spending, which potentially impacts the monetary policy. Previous data shows 261k vs 265k forecast for this week. Why should traders care? The FED is analysing a potential interest rate hike for September or later this year, which this data helps determine.

US unemployment rate out Friday 2 September. This figure has steadily fallen over the past few years and the FED believes the job market is near full employment. Previous data shows 4.9% vs 4.8% forecast for this month. Why should traders care? A new decline in the unemployment rate, could support optimism in the economy and confirm the continued solid performance of the labour market.

NFP figures released Friday 2 September. NFP shows the change in the number of employed people during the previous month, excluding the farming industry. Previous data shows 255k vs 186k forecast for this month. Why should traders care? A strong NFP figure improves the likelihood of an increase in the interest rate this year. After the Jackson Hole event, the possibility of a December hike moved up to 60% from around 50%*. The market still believes a September rate hike is unlikely, but did jump to 30%*.

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* CNBC source