Is The Fed Nearing A Hike? NFP Is A Make Or Break Moment

The dollar rallied on Yellen’s Jackson Hole speech and the consequent comments by Fischer and the upcoming Friday became much more important. Will the NFP justify a rate hike on September 22bnd? Here are two opposing opinions:

Here is their view, courtesy of eFXnews:

This Week’s NFP Data To Reinforce Our Fed Call For A September Hike – BNPP

Fed Chair Yellen delivered the hawkish message we were looking for on Friday, telling her Jackson Hole audience that the case for raising rates has strengthened recently. It took follow-up comments from Vice Chair Fischer later in the morning to generate a meaningful adjustment higher in rates and the dollar though.

Our expectation is that the hawkish message from Fed Chair Yellen last week will pave the way for a September hike, which should help the USD recover some ground.

We expect the data will actually reinforce rate hike expectations. Our economists expect Friday’s employment report to show robust payroll growth of 215k, which will put 3m average job growth at a powerful pace of 254k. Indeed, given strength in the last two reports, even a 125k result on Friday would leave the 3m average running at 224k. Our position metrics suggest USD positioning was short heading into the speech.

We remain positioned via derivatives for a limited recovery in the USD versus the EUR, JPY, GBP and AUD. However, we do not expect the Fed to signal or embark on a series of rate hikes, which should limit the extent to which US real yields can recover from current low levels.

Here Is Why August Jobs Data Would Fall Short Of Fed’s Criteria For A September Hike – RBS

In the wake of Jackson Hole, there is little doubt that the timing of Fed action will be determined by the data. According to the minutes from the July FOMC meeting, some participants (including Yellen, presumably) preferred to delay action until they were confident inflation was moving closer to 2% “on a sustained basis” and until the data gave them greater confidence that economic growth was “strong enough to withstand a possible downward shock to demand.” The August employment data, while healthy, may fall short of that criteria on both fronts.