Finally, non-farm payrolls – Commerzbank

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

The US NFP report is close

“According to Bloomberg, economists expect about 165,000 new jobs. So let’s put aside for a moment that this number is very 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, US recession fears will rise again.”

“The market would price in a higher probability of a 50 basis point move in September and the US dollar would be under pressure. A much higher number would ease those concerns, but the focus would shift back to wage developments. A significant acceleration in wage growth could once again raise doubts about disinflation. Overall, a 25 basis point move would become more likely and the US dollar would strengthen again.”

“If, on the other hand, the number comes in as expected, it’s harder to say. On the one hand, it would pave the way for the Fed to cut rates by 25 basis points. Remaining uncertainty about the start of the rate cut cycle would be removed, paving the way for a weaker USD. However, much of this appears to have been priced in in recent days. The market is currently speculating on more rate cuts by the end of the year. As a result, some of the dollar’s weakness this week could be wiped out again.”