European FX Open - A critical NFPs ahead of the FOMC on the 18th

In the wake of this week's ISM manufacturing and jobs reports misses (ADP, JOLTS) Fed's Goolsbee said overnight that the longer-run trend of labor-market and inflation data justify the Federal Reserve easing interest rate policy soon, and then steadily over the next year.

As we wrote in Monday's neutral-to-bearish The USD Week: -25bps or -50BPs?. That looks the main question ahead of the decision on the 18th and today's data could well go some way to deciding, at least, which way the market thinks the FOMC will go.

The NFPs are seen improving at 165k in August vs 114k last, with the unemployment rate expected falling to 4.2% from 4.3% and AHE earnings rising 0.3% m/m and 3.7% y/y. Any softer surprises could well hurt the broader USD anew.

It's a pretty busy slate ahead though investors are likely to wait on the critical US numbers.

We get Norway and German IP at the top of the hour followed by the likes of French IP/MP, Swiss FX reserves, Italian retail sales and final EMU Q2 GDP.

Also in the second half and after this week's latest BOC rate cut is the Canada employment report for August too, with a positive change of 25.0k expected.

Overnight, Japan’s household spending missed expectations and rose just 0.1% y/y, adding to concerns that overall economic growth will stay tepid in Q3.

Fed's Williams and Waller at close are scheduled speakers.

Again overnight and something we have been touching on, ex-BOJ Watanabe said the Bank may hike interest rates faster than many currently anticipate and it should strive to better telegraph those moves to ensure markets don’t panic.

Meanwhile, Bbg reports Republican presidential candidate Donald Trump pledged to cut the corporate tax rate, slash regulations and audit the federal government, embracing an idea proposed by billionaire backer Elon Musk, as he pitched his agenda to Wall Street and corporate leaders in New York. And, the Biden admin plans to impose export controls on critical technologies including quantum computing and semiconductor goods, aligning the US with allies working to thwart advancements in China and other adversarial nations.

And, in an Emerson College national poll, Kamala Harris’s lead narrowed this month to 49% over Trump’s 47%,

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