Research Team at RBS, notes that the US employment data were solid and, on their own, would certainly be sufficient to keep the Fed on its gradual tightening path. Key Quotes “The question remains whether financial conditions continue to tighten and how much risk the Fed believes this poses to the U.S. economy. While the Fed may want to wait a bit longer than March in order to better assess the balance of risks, we still think the odds are high that the Fed moves by June (we would not discount an April hike). Nonfarm payrolls rose by just 151,000 in January (private payrolls were up 158,000). However, a deceleration was widely (and rightfully) anticipated following an average payroll gain of 279,000 in Q4 (which even us optimists felt was unsustainable). Looking by sector, the composition of payroll gains were in line with our expectations. Other indicators within the establishment survey were even more positive with respect to the ongoing health of the economy. For example, the workweek expanded from 34.5 hours to 34.6 hours (which equates to about 350,000 additional new jobs). Combining the payroll change and workweek, the index of total hours worked advanced by 0.4%, the best performance since last July. Importantly, the improvement in the labor market finally seems to be translating into firmer wages. Average hourly earnings climbed in January by 0.5% (more than expected, even assuming an upward bias from the calendar quirk). As a result of the annual revisions, the December year/year reading was revised up to 2.7% and the reading slipped to just 2.5% in January (prior to October, the year/year reading had not exceeded 2.3% since 2009). The unemployment rate fell from 5.0% to 4.9% (4.921% unrounded). Importantly, the jobless rate fell in January for the “right” reasons i.e. both employment and the labor force increased, with the growth in employment outpacing that of the labor force.” For more information, read our latest forex news.