Job Growth Vs Wage Growth

Jobs numbers came out better than expected with unemployment dropping to 5.6%. This has caused many to think that the end of low rates in the US is near, at least briefly. Markets  gave back gains and treasuries rallied on thoughts that the imminent rate hike in the middle of this year may be delayed until later in the year or even 2016. Why? Many think if it because of the drop in wages, which adds to the deflationary pressures of lower oil prices. The Fed has been concerned with the employment mandate while allowing inflation to drop below the desired 2% mark. This could cause delays in the rate increases that many have come to expect. If that is the case a few trends could be challenged, at least in the near term. The stock markets could see a continues rally next week as the Fed will be seen as sticking with accommodative policy for longer. The bigger trend reversal would be a decline in the dollar to other currencies as seen with the pound since the middle of this year (when economic news started to concern the BOE) there could be a sustained decline in the dollar as investors measure this delay in rate increases. While the dollar index might see higher prices from the disproportionate weight of the Euro, some currencies such as the pound might stage a comeback in the next few months.