Post US NFP money market futures begin to price in a less hawkish Fed

The highlight of the day, the US Nonfarm Payrolls report for February, showed the economy adding 311,000 jobs, exceeding estimates. January’s data was revised down from 517,000 to 504,000. The Unemployment Rate was above estimates of 3.4%, at 3.6%, signaling that the labor market is easing. Average Hourly Earnings grew 4.6%, and the focus shifted toward the US Consumer Price Index (CPI) next Tuesday.

The data weakened the US Dollar, as shown by the NZD/USD climbing from 0.6117 to 0.6140s. Investors’ initial assessment of the report sees the US Federal Reserve (Fed) hiking rates by 25 bps in March., contrarily to a 50 bps increment. Meanwhile, the swaps markets foresee the first rate cut by the year’s end.

During the week, Fed Chief Jerome Powell stated that rates would peak higher, and if data warranted a faster pace of tightening, the US central bank is ready to act. Now that the first tranche of US data is under the belt, Powell and Co. will be focused on next week’s CPI. Traders should remember that the Fed blackout would begin on Friday at 23:59 hrs.

On the New Zealand front, the economic calendar featured Business PMI in New Zealand, which came at 52 above the previous month’s reading of 50.8, rising for two consecutive months after bottoming around 47.4 in November 2022. Manufacturing Sales in NZ plunged 9.9% YoY, its most significant decline since mid-2020.