- We had another round of soft US jobs data to digest yesterday ahead of today’s eagerly awaited Non-farm Payroll print. The ADP Private Payroll report came in 99k, which was considerably below market expectations of 145k, and was the lowest print since January 2021. The previous month was also revised lower, and coupled with recent labor markets stats, suggests moderating growth in employment. The weekly jobless claims came in a little better than expected, triggering a modest US Dollar sell off throughout the session. Treasury yields also softened as markets continue to digest the labor market data and its impact on the timing and size of future rate cuts from the central bank.
- All eyes will be on the August jobs report at 1.30pm UK time, as today’s release will be crucial for Fed policy going forward. Market expectations are for a print of around 175k, and for the jobless rate to come in at 4.2%. An inline print would likely suggest that the Fed would be prepared to cut interest rates by 25bp per quarter, starting at the September meeting. Markets will be paying attention for a very soft print which would increase the odds of a recession and would bring a 50bp rate cut this month on to the table.
- The softer greenback helped to push EURUSD above the psychological 1.11 level where it is currently consolidating ahead of resistance at 1.1120. Similarly, GBPUSD rallied to test resistance at 1.3185, and dipped a touch as markets look to tread water ahead of this afternoon’s key data.
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