NFP review in light of FOMC comments

Today US non-farm payroll pointed at weaker job gains for month of July, which casts some doubts over FED's ability to hike rates after comments in last FOMC.

In last FOMC, FED officials pointed that they are looking for some further improvement in the labor market.

These comments can be read in different ways:

• Possibility exists that FED might have indicated to further gain in momentum in labor market, which surely casts doubt over rate hike. This view is dollar negative.
• Another point of view could be FED is looking for just improvement, which will mean unless there are declines in job, any job addition would be improvement, since more people got hired. This view is dollar positive.

Key highlights:

• Headline number for total hires came at 215,000, below expectations of 225,000. Last two months headline number got revised by +14,000.

• Wages grew by 2.1% in July, better than 2% in June.

• Labor force participation rate remained flat at 62.6%.

• Unemployment rate remained flat at 5.3%.

• Average weekly hours rose to 34.6 from 34.5.

Impact:

• Dollar has strengthened somewhat over the report, indicating prevalence of second view suggested above.
• However, Dollar has not been able to break free of its range, suggesting further possibility of a decline. Maybe New York session trading might provide further clarification over the prevalent bias.