Talking Points:
• After dropping the term 'patient' from its rhetoric, the FOMC progressed the time frame for a rate hike
• With the discussion of rates intensifying, the importance of key data like the jobs report is amplified
• Holiday liquidity will complicate the 'risk' response to NFPs, but the data can still drive the Dollar
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The Fed continues to mark the milestones to the eventual first rate hike in the next hawkish policy regime. After last month's FOMC decision, the market was delivered its most distinct update for a possible near-term launch. Having dropped language that was seen as a time buffer to tightening, rate speculation will increasingly focus on data that intensifies or alleviates the need for tightening the reins. Employment data is one of the 'dual mandates' for the central bank when it deliberates monetary policy; and that makes the monthly NFPs report of particular importance. That said, the payrolls are less important that the general trend for the more 'qualitative' measures. What's more, the jobless and participation rates are less important than the 'inflation' element of the report in wages. How will this important event risk shape the short-term volatility and trends for the Dollar and general risk trends? We discuss that in today's Strategy Video.
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