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NFP and PCE Inflation to Support Hawkish Fed Bets as Dollar Stands Tall

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Amidst the Ukraine crisis and dimming global growth outlook, the latest jobs report out of the United States will take centre stage on Friday (12:30 GMT). Before that, the Fed’s favourite inflation metric is released on Thursday. The data is expected to reinforce confidence in the US economy even as the risk of a recession grows in Europe. But is there a danger the Fed is about to tighten policy too aggressively and how much will this week’s numbers matter for the US dollar?

A very tight labour market

There can be no doubt that the US labour market is extremely tight right now and Friday’s jobs figures will probably show that hiring conditions got even tighter in March. Nonfarm payrolls are projected to have risen by 490k over the month – a lower pace than in February but a very healthy gain, nevertheless. Accordingly, the unemployment rate is forecast to have dipped by 0.1 percentage point to 3.7% in what would mark a new post-pandemic low.

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