Another big day is ahead of us as we all wait for a confirmation of a possible rate hike during the Federal Reserve meeting in March.

All eyes today are headed toward the US Jobs Report, which will be released at 13:30 GMT+, where the Non-Farm Payrolls, Unemployment Rate, and the Average Hourly Earnings will be released from the US.

Traders need to plan their trade before such news as once the figures are announced, the market impact is usually massive.

Let’s start with a look at the expectations:

Indicator Forecast Prior Non-Farm Employment Change 190K 227K Unemployment Rate 4.7% 4.8% Average Hourly Earnings MoM 0.3% 0.1% Average Hourly Earnings YoY 2.5% 2.5% Participation Rate 62.9% 62.9%

 

Looking at the table above, the figures seems to be encouraging, which means that the report is likely to keep the Federal Reserve on course to raise rates at March’s meeting.

However, there are many factors involved in today’s report and for the Federal Reserve meeting.

What Matters The Most In Today’s Jobs Report

First, the new jobs created are no longer matters as the long-term trend is stable and the US economy is adding around 180K each month since more than two years.

What matter’s the most in today’s figures is the wages growth. Moreover, you need to keep an eye on the YoY Average Hourly Earnings and not only the MoM. This is what most of traders miss in every jobs report.

Many ask why the Dollar went down last month despite the fact that the US economy added more than 220K new jobs. Well, the quick answer is because the wages growth slowed down.

The Federal Reserve need to see higher wages on the longer term in order to support inflation, which in return would give the Federal Reserve more room to raise rates.

As long as there is no wages inflation, this means that the core inflation will be at risk to slow down, which would push the Federal Reserve away from raising rates.

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