*Trump has picked up trade wars with several countries and the US economic growth has lost its momentum. *The Fed's monetary policy decision is dependent on the US job's market.
Today’s US NFP data has a special importance among traders. We all know that President Trump has turned the trillion dollar US economy in a war ship and he is picking up conflicts on his left and right. This has left a huge impact on the sentiment among investors.
Due to this reason, there is no doubt that the cracks have started to surface in the US economic data. As a result of this, main stream banks have started to revise their growth estimates for the US economy.
But, Mr Trump blames everything on the Fed’s monetary policy and he believes that the US equity markets would have been higher by at least 10,000 points if there were no interest rate hikes by the Federal Reserve Bank. Jerome Powell, the chairman of the Fed, has substantially changed the bank’s monetary policy stance since last year. The chief reason for that is the slowdown in the US economy because of the on going trade war between the US and China.
Although, it has taken a long time for the Fed to acknowledge the Fed that the trade war has dented the sentiment over in the US.
In the light of this, investors have started to bet that the Fed is going to make an interest rate cut in its monetary policy. The odds have started to stack up for such an event to take place before the end of this year.
It is in this essence that the US NFP number is of significant importance because the timing of such decision is very much dependent on the strength of the job market.
The US wage growth has experienced a strong upward trend since the financial crisis. The average hourly earnings number is expected to maintain its reading of 3.2% which is well above the average of 2.3%. The headline number is expected to come in at 175K. If we see any weakness in any of these numbers, it is highly that we would see more weakness in the dollar index becuase of the expectations of interest rate cuts.