USD: Softer labour signals and lower yields weigh – Danske Bank

Danske Research Team points to softer US labour indicators and lower yields as headwinds for the US Dollar (USD). JOLTS openings fell and the openings-to-unemployment ratio dropped, hinting at weaker wage growth. They also project a below-consensus non-farm payroll (NFP) print and a higher unemployment rate, reinforcing a dovish tilt for the Federal Reserve (Fed) despite energy-driven inflation risks.

Labour softness underpins dovish Fed tone

"In the US, JOLTS job openings dropped to 6.882m in February, below the consensus of 6.918m, while January was revised upwards to 7.24m. The job openings-to-unemployment ratio fell to 0.9, signaling weaker wage growth in the next six months as workers' bargaining power diminishes. Hiring slowed, while involuntary layoffs edged higher, offering overall dovish signals for the Fed."

"... the ADP private sector employment report and ISM manufacturing data for March are set to be released. February's ADP report showed a gain of 63k private sector jobs. Weekly data highlighted a recovery, with employers adding an average of 10k jobs per week through early March. However, this momentum weakened towards the end of the period, indicating a potential slowdown in job growth."

"On Friday, key US labour market data will be released. We project non-farm payroll growth at +30k, below consensus, with the unemployment rate rising to 4.5% and average hourly earnings increasing by +0.3% m/m SA. Recent indicators, including declines in daily job postings and weekly private sector employment growth, point to a softer labour market."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)