The US dollar fell against all major currencies immediately after the release of the US labor market report for the month of February, which showed the addition of 311 thousand jobs outside the agricultural sector, while expectations indicated the addition of 205 thousand jobs after adding 517 thousand jobs in January, which were revised to 504 thousand.
At the same time, the report showed an increase in the unemployment rate to 3.6%, while expectations were for it to remain at 3.4% as it was in January. The disguised unemployment rate, which calculates part-time workers wishing to work for a full day, increased to 6.8%, while it was expected. It fell to 6.5% from 6.6% in January.
As for wage inflationary pressures in the United States during February and July, the report showed an annual increase in the average hourly wage by 4.6%, while it was expected to rise by 4.7%, after an annual increase of 4.4% in January. Increasing inflationary pressures on wages, and thus easing pressure on the Fed to do more to contain these inflationary pressures resulting from wages.
After the Federal Reserve President expressed, during his testimonies before the Senate Banking Affairs Committee and the House Financial Affairs Committee, the Fed’s continued adherence to fighting inflation and placing it at the top of its priorities, which may push it to return to raising the interest rate by 50 basis points again and keeping the interest rate high for a longer term.
The Fed Chairman referred to the impressive January jobs report, which came out stronger than everyone expected, to explain why he believes that what the Fed is doing will take a long time to reach its goal, as it appears that we will need to make more interest rate increases and hold them. Rising for longer than we thought if the inflation data we’re working with continues to point higher.
This may lead the Fed to raise its expectations regarding inflation and the interest rate when it meets the members of the Market Committee on the 21st and 22nd of March this year, after the members had previously expected the average interest rate to indicate that it would reach 5.1% by the end of 2023 and 4.1% for 2024 and 3 1% in 2025 from 4.6% for 2023, 3.9% for 2024, and 2.9% for 2025 that members expected last September.
As for inflation, the average expectation of the committee members regarding the price index for personal expenditure on consumption came to indicate an increase of 5.6% in 2022, 3.1% in 2023, 2.5% in 2024, and 2.1% in 2025 from 5.4% in 2022 and 2. 8% in 2023, 2.3% for 2024, and 2% for 2025 were expected by members last September.
Excluding food and energy prices, it indicates an increase of 4.8% in 2022, 3.5% in 2023, 2.5% in 2024, 2.1% in 2025, from 4.5% in 2022, 3.1% in 2023, 2.3% in 2024 and 2. 1% for 2025 was expected by members last September.
It is worth noting that the price index for personal expenditure on consumption, the Fed’s preferred indicator for calculating inflation for the month of January, had already shown an increase of 5.4% annually, while it was expected to rise by 4.9% after a rise of 5.3% in December, as the index showed excluding food and energy prices. An increase of 4.7%, while it was expected to increase by 4.3% only, after an increase of 4.6% in December.
As previously shown, the unit cost of operating in the United States for the fourth quarter increased by 3.2%, while it was expected to rise by 1.6%, after an increase in the third quarter by 2.4%, with the increase in unit productivity working outside the agricultural sector in the United States in the fourth quarter of Last year, it increased by 1.7%, while it was expected to rise by 2.6%, after a rise in the third quarter of 1.2%.
There is no longer speculation about raising interest rates by 50% again, after the Federal Reserve at the beginning of last month raised it by only 0.25%, after the market committee that determined monetary policy in the United States raised the interest rate in December by 50 basis points, after raising it for four consecutive meetings. by 75 basis points to counter inflation.
The future contract of the Dow Jones industrial returned to trading above 32200, immediately after the release of the labor market report for the month of February, after its declines continued after Powell’s testimony, which came with everything that was already worrying the dealers in these stock markets, which led to a decline below the psychological level of 32000 points during the trading session. Asian day
While the dollar fell against all major currencies immediately after the issuance of today’s report, which dropped the returns within the secondary financial markets, to decrease the return on the US Treasury’s permission for a period of 10 years to the limits of 3.78% so far.
This led to a decrease in the attractiveness of the dollar and the rise of gold above $1,840 an ounce once again, after this yield had crossed the 4% level as a result of Powell’s comments this week that supported expectations that the Federal Reserve would raise interest rates to higher levels in order to lower inflation rates.
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