US: NFP report to set the tone for the coming week - ING

Analysts at ING feel that the US jobs report will set the tone for the coming week, while the business surveys suggest the economy is performing well and creating jobs in reasonable numbers.

Key Quotes

“However, last month’s robust 222k gain probably misrepresents the true picture so we look for a slower rate of job creation in July at around 170k. The wage number will also be a key figure for the market to focus on. Inflation pressures appear limited at this stage and a major surprise within in this is that despite the tight labour market, wages growth has been so weak. Any pick-up here could potentially lead to the market giving greater credibility to the Fed’s current projections that it will hike rates four occasions over the next 18 months (ING expects three hikes, while the market is barely pricing in just one). In this regard, CPI will be another key report. We think the headline and core (ex food and energy) annual rates could rise to 1.8% from 1.7%. There are also several Federal Reserve officials due to speak, but the next major event to provide guidance on the outlook for policy will be the Jackson Hole central bank conference on 24-26 August.”