Today’s US job data pointed to a softer labor market but stopped short of signaling a collapse. The numbers reinforced the message that hiring is slowing, though not disastrously, giving the Fed justification to ease policy modestly without raising alarm over economic stability. Markets remain almost unanimous in pricing a 25bps cut this month.
The outlook beyond this month remains uncertain. Fed fund futures show the probability of an October cut at just over 50%, effectively a coin toss. The prevailing base case is that policymakers may move at a gradual pace, delivering one cut per quarter until policy converges closer to neutral. But much depends on the next test—tomorrow’s nonfarm payroll report.
Caution is visible elsewhere in the markets. US equity futures were flat in early trading. Gold eased slightly after setting fresh record highs. Importantly, bullion remains steady above the 3,500 level, suggesting the pullback is more consolidation than reversal. Bitcoin is attempting to rebound but continues to struggle for momentum above the 110,000 mark.
In currency markets, risk-sensitive pairs came under pressure, with Kiwi and Aussie leading declines for today so far, followed by Euro. The Dollar, by contrast, outperformed, helped by safe-haven demand and resilient yields. Sterling rebounded after earlier weakness, placing second on the leaderboard, while Swiss Franc also held firm. Yen and Loonie were mid-pack performers.
In Europe, at the time of writing, FTSE is up 0.23%. DAX is up 0.63%. CAC is down -0.34%. UK 10-year yield is down -0.03 at 4.719. Germany 10-year yield is down -0.03 at 2.713. Earlier in Asia, Nikkei rose 1.53%. Hong Kong HSI fell -1.12%. China Shanghai SSE fell -1.25%. Singapore Strait Times rose 0.17%. Japan 10-year JGB yield fell -0.032 to 1.605.
US ADP jobs up 54k, hiring momentum slows further
US private employers added 54k jobs in August, short of expectations for 72k, according to ADP. Goods-producing industries created 13k positions, while services added 42k. Hiring by firm size showed modest gains across the board, with small companies up 12k, medium-sized firms up 25k, and large firms up 18k.
Wage dynamics were mixed. Year-over-year pay growth for job-stayers held steady at 4.4%, while job-changers saw wages rise 7.1%, slightly faster than July’s 7.0%.
ADP’s chief economist Nela Richardson said hiring momentum has been “whipsawed by uncertainty,” citing factors such as labor shortages, skittish consumer demand, and potential disruption from artificial intelligence adoption. The data add to concerns that job creation is losing momentum ahead of Friday’s official nonfarm payrolls report.
US initial jobless claims rise to 237k vs exp 232k
US initial jobless claims rose 8k to 237k in the week ending August 30, above expectation of 232k. Four-week moving average of initial claims rose 2.5k to 231k.
Continuing claims fell -4k to 1940k in the week ending August 23. Four-week moving average of continuing claims fell -7k to 1947k.
Eurozone retail sales fall -0.5% mom, food and fuel drag
Eurozone retail sales fell -0.5% mom in July, steeper than expectations of a -0.2% mom decline. Food, drinks, and tobacco sales dropped -1.1%, while automotive fuel purchases slumped -1.7%. Non-food sales edged higher by just 0.2%, offering little offset to the overall weakness.
Across the broader EU, sales slipped -0.4% mom on the month. The divergence among member states was notable: Croatia (-4.0%), Estonia (-2.0%), and Germany (-1.5%) recorded the sharpest drops, while Lithuania (+1.5%), Latvia (+1.4%), and the Netherlands (+1.1%) posted gains.
Swiss CPI subdued at 0.2% yoy, but no immediate deflation threat seen
Swiss consumer prices slipped in August, with headline CPI falling -0.1% mom, below expectations for a flat reading. Core CPI, which excludes fresh products and energy, also dropped -0.1% on the month, as both domestic and imported product prices declined by -0.1% mom.
On an annual basis, inflation held steady at just 0.2% yoy, in line with expectations. Core CPI eased further to 0.7% yoy from 0.8% yoy previously. Domestic price growth slowed to 0.6% yoy from 0.7% yoy, while imported prices contracted by -1.3% yoy, a slight improvement from -1.4% yoy in July.
The data confirm that inflation in Switzerland remains exceptionally subdued. Yet, deflation risk is not imminent. That leaves little urgency for the SNB to bring back negative interest rates for now.
USD/CAD Mid-Day Outlook
Daily Pivots: (S1) 1.3777; (P) 1.3793; (R1) 1.3808; More…
USD/CAD’s break of 1.3813 support turned resistance argues that corrective pullback from 1.3923 has completed at 1.3725, ahead of 1.3720 support. Intraday bias is back on the upside for retesting 1.3923 resistance first. Firm break there will resume whole corrective rise from 1.3538. For now, risk will stay on the upside as long as 1.3725 support holds, in case of retreat.
In the bigger picture, price actions from 1.4791 medium term top could either be a correction to rise from 1.2005 (2021 low), or trend reversal. In either case, further decline is expected as long as 1.4014 cluster resistance (38.2% retracement of 1.4791 to 1.3538 at 1.4017) holds. Next target is 61.8% retracement of 1.2005 (2021 low) to 1.4791 at 1.3069.
