North American FX Open - Market braced for BLS jobs revisions

We have seen a bit of dip buying/bargain hunting in the DOLLAR after the US unit slipped further in early Asian trade. The DXY registered a new 2024 low at 101.310, just below the Jan 2nd base of 101.340.

Eur/Usd hit 1.1133 in Asian trade, with the Dec 28th high up at 1.1139 now within reach. A break above that aforementioned level, would pave the way for a test of the 2023 peak at 1.1276.

Yesterday the Fed's Bowman repeated that rate cuts are appropriate if inflation keeps slowing, but admitted that she is not quite ready to sign off on an interest rate cut next month, as price growth continues to be "uncomfortably high" and she is concerned that it could begin trending up again.

The market also took note of the Philadelphia Fed Non-manufacturing Business Outlook Survey which indicated a decline in firms' assessment of general business activity for August.

Today's US focus falls on the release of the FOMC minutes, which are going to feel a bit out of date given the decision was delivered a couple of days before the weak NFPs print. Before then though, the BLS releases preliminary annual payrolls benchmark revisions. Markets are primed for the fact that the US employment situation is less buoyant than originally seen and that there could be up to one million jobs vanishing.

Overnight, China’s central bank set its daily reference rate for the yuan broadly in line with expectations for the first time in more than a year, a sign it’s loosening its tight grip for the managed currency.

Japan’s exports rose at a faster pace in July, largely reflecting the yen’s drop to a 38-year low last month. The Bank of Japan also released a pair of research papers highlighting the persistence of inflationary pressure in the economy, indicating there is still a case to be made for another interest rate hike.

UK public sector net borrowing for July came in higher than expected at Gbp 3.1 bln, vs the Gbp 1.5 bln forecast and will only add to the tough decisions on the public finances for the new Labour administration. The ONS pointed to rising social benefits, pushed higher by inflation and rising government wages as drivers of increased spending, compared with a year ago.

---- Subscribe to read more ----

To receive this analysis plus much more, subscribe to IGM. Request your free trial of the service today.