The US payrolls report for July was unambiguously weak, with low headline job creation (114k vs. 175k), another increase in the unemployment rate to 4.3%, its highest level since October 2021, and weak wage growth (3.6%).
The data seemed to take the Federal Reserve by surprise, as while the FOMC strongly indicated that a September cut was on the way, it gave no hints of an accelerated rate cut timetable following its meeting last week.
We think expectations for cuts, which are now pricing in the equivalent of five full 25bp cuts (125 basis points) for the remainder of 2024, implying a couple of 50 basis point cuts, are an overreaction to what is so far the first weak labour market report of 2024. It does seem clear that in the absence of first-tier data out of the US this week, the dollar may struggle.
The information contained in this document was obtained from sources believed to be reliable, but its accuracy or completeness cannot be guaranteed. Any opinions expressed herein are in good faith, but are subject to change without notice. No liability accepted whatsoever for any direct or consequential loss arising from the use of this document.
Recommended Content
Editors’ Picks
EUR/USD retreats from tops and revisits 1.0970 post-US data
The mild rebound in the Greenback following the firmer-than-expected US ISM Services PMI motivates EUR/USD to give away part of the earlier advance above the key 1.1000 barrier and recisits the 1.0970 zone.
GBP/USD remains offered and flirts with 1.2770
GBP/USD seems to have now embarked on a consolidative move on Monday, although it remains well on the defensive near the 1.2770 region amidst the broad-based risk aversion theme,
Gold bounces off lows and approaches $2,390
The selling pressure around Gold remains unabated so far, prompting the yellow metal to attempt a lacklustre rebound to the proximity of the $2,390 zone per ounce troy.
Crypto Today: Bitcoin slips under $50,000, double-digit decline in top 30 cryptocurrencies
Bitcoin and altcoins in the top 30 have suffered double-digit corrections in the past 24 hours. XRP suffers a nearly 15% drawdown on Monday, slips to support at $0.4459.
Five fundamentals for the week: Global sell-off has a life of its own, Middle East may spiral out of control Premium
Panic – no better word to describe a fall of over 12% in the Nikkei stock index and plunges in almost all assets. Will it continue? The sell-off has a life, but the factors triggering it matter.