USD: Finally non-farm payrolls – Commerzbank
06.09.2024, 10:02

USD: Finally non-farm payrolls – Commerzbank

The day of the US employment report has finally arrived. The market seems to have been holding his breath all week to find out how many new jobs the US economy created last month, Commerzbank FX strategist Volkmar Baur notes.

The US NFP report is nigh

“According to Bloomberg, economists are expecting around 165,000 new jobs. So, let's put aside for a moment the fact that this number is highly volatile and will be revised several times over the next few months before we can say for sure how many jobs were actually created. That's not what's bothering the market today. If the number is significantly weaker, fears of a US recession will rise again.”

“The market would price in a higher probability of a 50-basis point move in September and the US dollar would come under pressure. A much stronger number would allay these concerns, but the focus would shift back to wage developments. A significant acceleration in wage growth could again raise doubts about disinflation. All in all, a move of 25 basis points would become more likely and the US dollar would strengthen again.”

“If, on the other hand, the number comes in as expected, it is more difficult to say. On the one hand, it would clear the way for the Fed to cut rates by 25 basis points. The remaining uncertainty about the start of the rate cut cycle would be removed, paving the way for a weaker USD. However, much of this seems to have been priced in over the past few days. The market is now speculating on more rather than fewer rate cuts by the end of the year. As a result, some of this week's dollar weakness would be likely to be priced out again.”

 

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