NFP report irrelevant as Fed hike is a done deal

After the massive ADPs on Wednesday, which came in slightly below 300k, financial markets are now awaiting confirmation from the NFPs, which are expected to come in for February lower than the January print, 200k vs 227k.

From our standpoint, this read is irrelevant as it will have little impact on the US central bank’s decision concerning the raising of rates.

Despite the occasional spectacular miss from the ADP, we would not expect a low NFP read. A weak read could drive the dollar lower, knowing that there is room for disappointment as a rate hike is now priced in by the financial markets.

Moreover, there is the increasing probability of rate hikes at the next meetings. We reaffirm our belief that the Fed will not raise rates above 2% for the next two years as it could trigger a much deeper crisis.

The dollar should remain strong and while today’s NFPs are likely to be a non-event, one should not forget Trump’s stance that the dollar is too high. For the time being, European uncertainties are definitely sending the greenback higher.

Yann Quelenn – Market Analyst – Swissquote