Market Insider

July jobs is one last hurdle for Fed

Will jobs force Fed move?
Jobs report prediction: Pro
US employers cutting jobs at a high rate

The economy is expected to have added 223,000 nonfarm payrolls in July, enough to allow the Fed to pull the trigger on its first rate hike in nine years.

The Fed will consider a possible first rate hike at its Sept. 16 and 17 meeting, but economists say that even with a strong report, it is far from clear cut when the Fed will move off of the zero fed funds target rate it has had in place since late 2008. There are a number of variables, including that data between now and then must show continued employment strength, an economy that continues to grow and signs that inflation could pick up. Even if those conditions are in place, negative international developments, in the form of a possible financial shock, could slow the Fed's hand.

"It's really going to be more about what the last batch of data looks like. Not that the Fed will only focus on the last batch, but the market will focus more on the last batch. The market has to believe the Fed is going to tighten. If the fed wants to go, but the market doesn't price it, that would be the irony," said Joseph LaVorgna, chief U.S. economist at Deutsche Bank. "The Fed might have a trickier communications problem."