US employment growth is likely to accelerate, how will the Fed respond?

One of the most anticipated reports for the forex market is the US Employment Report. In anticipation of this data, experts predict that in December, the growth rate of employment in the US probably accelerated. In addition, it is expected that wages will increase significantly. All of this may help mitigate the recent surge in concerns about the state of the economy.

So far there is not a lot of good news, recent reports showed a sharp decline in consumer confidence and manufacturing activity last month and were regarded as clear signs that economic growth is losing momentum. It is hoped that the new data will be more positive. Economists predict that last month, the number of jobs in the non-agricultural sector probably increased by 177,000, after rising by 155,000 in November. If the forecast comes true, this will be good news for financial markets amid growing concern that the economy will slow down significantly in 2019. As for wages, the average hourly earnings are likely to grow by 0.3 percent in December, after rising 0.2 percent in November. Unemployment is projected at a 49-year low of 3.7 percent.

A strong employment report could force the Fed to continue its interest rate hike this year, further aggravating differences with Wall Street and Trump, who repeatedly criticized the Fed and Jerome Powell personally for raising rates. Financial markets do not predict a rate hike in 2019. The latest signal that investors do not see opportunities for further rate hikes was the fall in the yield on 2-year US Treasury bonds, which on Thursday fell below the Fed's discount rate for the first time in more than a decade.