- Yesterday’s US job openings print came in softer than expected at 7.67 million for July, from a downwardly revised 7.91 million for June and considerably below market estimates of 8.22 million job openings. Markets were sent into a panic with the dollar selling off and treasury yields tumbling. The data suggests that the US labor market is cooling more rapidly than the Fed has been expecting, with layoffs and unemployment increasing amid a decline in job openings. Yesterday’s data puts today’s ADP Private payroll release and weekly claims under even more scrutiny ahead of the key Non-farm Payroll release tomorrow which will likely set the tone for the greenback and Fed policy in the coming weeks.
- The Fed’s dual mandate of stable prices and maximum employment is clearly facing pressure on the employment side putting fresh burden on the central bank. The Fed next meets on the 17th and 18th of this month, and a rate cut is widely expected, however the jury remains out on whether officials will cut by 25bp or announce a more aggressive 50bp reduction.
- Both EURUSD and GBPUSD continue to consolidate mid their recent ranges as investors remain reluctant to build fresh positions ahead of Fridays US employment report. German Factory orders and Eurozone Retail Sales are on the docket this morning, however neither are expected to significantly shift EURUSD from its 1.0990 to 1.11 range.
- Elsewhere, The Bank of Canada yesterday cut its key interest rate by 25bp for a third consecutive meeting and said that it is “reasonable” to expect more easings to come if inflation continues to decelerate. The reduction was widely expected as policymakers remain concerned about undershooting their 2% inflation target.
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