Mixed US labor market reports sent the US dollar all over the charts

As markets hotly debate the Fed’s next policy moves, updates on the U.S. labor market — which Fed members said they are watching closely — are guaranteed to make market players nervous.

Thursday, a report from Challenger, Gray and Christmas reflected 75,891 planned job cuts in Augustthe highest August total since 2009 (excluding 2020). Not only that, but year-to-date hiring fell to the lowest total since the company began tracking in 2005.

Link to the August Challenger Report

Later, a report from ADP Research showed a net 99,000 job additions in Augustmuch weaker than the 144K increase that markets were expecting.

If that’s not weak enough, July’s reading was also revised lower from 122K to 111K.

Link to the August ADP report

Fortunately, subsequent updates have not been as apocalyptic for the US job market.

The The Labor Department’s weekly initial jobless claims fell from 232,000 to 227,000 in the week ended Aug. 30, less than the 231,000 increase that analysts had expected.

Link to the Labor Department’s initial weekly jobless claims report

S&P Global’s Final Services PMI also showed an upward revision from 55.2 to 55.7. The data revealed that employment fell for the first time since August, but that “the reduction in staffing levels was only modest.“

Link to S&P Global’s August Final Services PMI

Last but not least, The ISM services PMI improved slightly from 51.4 to 51.5 and beat expectations for a reading of 51.3 in August. However, the employment index in the report fell from 51.1 to 50.2 for the month.

Link to August ISM Services PMI

US Dollar vs. Major Currencies: 5 min

USD chart overlay against major currencies by TradingView

The US dollar, which was already showing weakness at the start of the trading session in Europe, fell sharply on the much weaker than expected ADP update as it supported deeper interest rate cuts from the Fed.

The greenback started to find support when the weekly jobless claims report came in better than expected and then gained an upbeat boost when closely watched services PMIs didn’t disappoint as much as the ADP report.

Unfortunately for USD bulls, the dollar briefly traded lower, possibly as traders took profits around the end of the European session and ahead of Friday’s US NFP reports.