Asian Currencies Edge Higher as Markets Look to Fed Rate Cut; Rupee Steadies Near Record Lows 
Asian Markets Mixed as Fed Rate Cut Bets Grow and Japan’s Nikkei Leads Gains 
Dollar Holds Steady as Markets Shift Focus to 2026 Rate Cut Expectations 
Asian Currencies Steady as Markets Await Fed Rate Decision; Indian Rupee Hits New Record Low 
IMF Deputy Dan Katz Visits China as Key Economic Review Nears 
Gold Prices Fall Amid Rate Jitters; Copper Steady as China Stimulus Eyed 
BOJ Governor Ueda Highlights Uncertainty Over Future Interest Rate Hikes 
Gold Prices Edge Higher as Markets Await Key U.S. PCE Inflation Data 
US jobs report for June has indicated a robust recovery following subdued reports for April and May. Employment in June rose 287,000 after growing just 11,000 in May. June’s employment growth accelerated since the Verizon strike came to an end.
Given that the employment growth fluctuated from 11,000 in May to 287,000 in June indicated that the job reports are volatile and too much emphasis should not be laid on one report, said Dankse Bank in a research report.
In spite of the recovery in June, the monthly rise in nonfarm payrolls have average a tad lower than 150,000 in the past three months. This continues to be the lowest since 2014. In all, the solid report recorded in June is not sufficient to offset the prior subdued reports of April and May, according to Dankse Bank.
The increase in jobless rate in June to 4.9 percent from May’s 4.7 percent should not be over interpreted as a rise in unemployment rate. This happened because of a higher participation rate and not on account of falling employment. The jobless rate had declined in May from April’s 5 percent because of a shrinking labor force. Hence it was likely that it would be reversed slightly in June’s report.
Participation rate in June increased to 62.7 percent from 62.6 percent in May. Average hourly earnings were a slight disappointment as they were up just 0.1 percent month-on-month in June. This is lower than anticipated and lower than the recent trend. Currently, wage inflation is at 2.6 percent.
Despite the recovery recorded in June, the US Fed is unlikely to hike rate in 2016, added Dankse Bank. The US central bank will be adopting a wait and see stance for a longer period to time because of Brexit. Moreover, the US Fed requires data from post Brexit to assess the effect of Brexit on the economic scenario in the US before moving forwards. The US economy is unlikely to be immune to a deceleration of growth in Europe.
“Due to Brexit, we have lowered our growth forecasts for the US economy from 1.9% to 1.7% this year and from 2.3% to 1.9% next year. Hence, we also expect the Fed to be on hold until June 2017 and only to raise rates twice next year (we expect the following rise in December 2017),” said Danske Bank.
A dovish-to-neutral stance is held by most of the FOMC members on monetary policy. The members are expected to rather delay the second raise than hike prematurely. The risk to the Fed view is expected to be balanced and hence the next hike might take place sooner if the effect of Bexit on the economy is smaller than anticipated currently, stated Danske Bank.
The US Fed can remain patient as the PCE core inflation continues to be lower than 2 percent, while inflation expectations have dropped and wage inflation remains weak.
