How does today's data fair for the bigger picture?
A real game of two halves is this one.
As mentioned, the headline numbers aren't important right now. We're still in the longest run of positive payrolls numbers since the report began. As much as the ADP is or isn't a correlation, the market still uses it as a gauge and that was a similar story on Wednesday.
Are wages that bad?
Not really but when you've got a central bank constantly saying they want 'more more more', that gets the market looking for 'more more more', and thus it gets disappointed at the most minor of misses. Wages at 2.5% in the current environment isn't bad. It's obviously not as good at 2.8% or 2.9% but like a lot of the data we've seen across Dec and Jan so far, the good Dec has softened in Jan.
Should Fed hike expectations take a knock on this?
Again, probably not but they have. March hike odds were 32.0% yesterday and they're 24.0% now. The dollar got rightfully slammed (Hello our old mate at 112.50) but that's been it so far.
The following minutes and hours of today will define how the market views the dollar into the weekend. For me it's still in rally selling mode but we seem to be hitting a floor at 112.50 and 112.00, so unless we break that, then there's only one direction to go. My beady eye will be on 113.90-114.00 for shorts.
The Fed as usual, have painted themselves into a corner where good is never good enough. Wages will now have to impress for the next two months to bring a March hike closer to the table, and they are just one part of the puzzle.
