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Analysts at Danske Bank take a look at next week key events in the US, among them is the official employment report on Friday. They see that non-farm payrolls are likely to show healthy gains along with another uptick in wage growth.

Key Quotes:  

“In the US, we have a busy week ahead of us after this week was quieter with the FOMC meeting as the most important event. The many scheduled Fed speeches this week will most likely not change the Fed being on autopilot until 3% is reached.”

“The most important release this week is the jobs report for September on Friday. We estimate non-farm payrolls rose around the current trend of 190,000. As employment has risen for so long, the most important part of the jobs report is the average hourly earnings, as they have risen faster than the recent trend over the past four months and the annual growth rate is at 2.9% y/y, which is a cycle high. It seems like the tighter labour market is beginning to put upward pressure on wage growth. We estimate average hourly earnings to have risen to +0.25% m/m in September, which would lead to a decline in the annual growth rate to 2.7% y/y. Average hourly earnings are quite volatile, so it does not change our interpretation that wage growth is increasing gradually.”

“ISM manufacturing is due out on Monday. Overall, ISM manufacturing has been too high compared to reality for a couple of years and, in our view, is a poor indicator at the moment. We estimate the ISM index fell to 60 from 61.3.”