It's a bigand the markets are squaring up before major events such as the Federal Reserve, European Central Bank and the US nonfarm, Payrolls as the showdown and grand finale. Firstly, the Federal Reserve has been price din by the markets for a 25 basis point hike but they are also factoring in a benchmark rate to peak at 4.93% in June, up from 4.33% now. there are also calls for the central bank to cut it to 4.52% by December.
Analysts at Danske Bank ultimately see the ECB's terminal rate at 3.25% in May but argued that risks remain tilted to the upside. They note also that the January Flash HICP figures will be released just ahead of the meeting on Wednesday. ''We look for an uptick both in the headline and core terms.''
The grand finale will come with the US Nonfarm Payrolls on Friday whereby the consensus sees 185k jobs added vs. 223k in December, as analysts at Brown Brothers Harriman said, explaining that the Unemployment Rate is seen up a tick to 3.6% and average hourly earnings at 4.3% YoY vs. 4.6% in December. ''All in all, the labour market remains tight and it’s hard to see how wage pressures can fall that much further given this tightness,'' the analysts argued.
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