All set for a Dec hike? - ING

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Nov 5, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    FXStreet (Guatemala) - James Knightley, analyst at ING Bank noted that the firm US data yesterday and supportive comments from Janet Yellen suggest the chances of a December Fed rate hike are rising.

    Key Quotes:

    "The October reading of the ISM non-manufacturing report looks very strong. The composite activity index has risen to 59.1 from 56.9 (consensus was 56.5). It has only been higher twice in the past seventeen years (July this year and August 2005).

    The details show that both new orders and business activity are roaring ahead (62.0 and 63.0, respectively, relative to a break-even level of 50) while employment improved again to an incredibly strong 59.2 reading – historically consistent with service sector employment growth of nearly 400k! With the ADP report posting a 182k gain today and jobless claims continuing to slide, this should more than offset the concern from the ISM manufacturing employment index dipping into contraction territory on Monday. There was even good news from the export orders component, which rose to 54.5 from 52.5, leaving it well above the 6-month rolling average.

    It does therefore appear that while the manufacturing sector remains under pressure from dollar strength and external demand weakness, the rest of the US economy is looking in good shape. If this is backed up by a respectable payrolls report (and hopefully a rise in average earnings) on Friday it will look increasingly likely that the Federal Reserve will come down in favour of hiking in December. This view was also supported by Fed Chair Yellen’s comments yesterday that the economy is “performing well” and that a December moves was a “live possibility”. "
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