JOLTS job opening numbers came in lower than expected yesterday, illustrating a cooling job market. Initial market reaction saw stocks drop and USD weaken as markets raised odds of seeing a 0.50% rate cut this month.
However, the move didn’t really continue, with both equities and USD reversing the losses shortly after. One reason for this was attributed to the low response rate in the survey meaning that perhaps it didn’t give a true reflection of the overall labour market. We shall wait to see what Friday's numbers bring.
The Bank of Canada cut rates by 0.25%, as was widely expected, and their forward guidance continues to suggest more rate cuts are likely to come. Market projections that by the July 2025 meeting, interest rates will be 3% vs the current rate of 4.25%.
The GBPCAD exchange rate remained stable throughout the day.
*Daily move - against G10 rates at 7:30am, 05.09.24
** Indicative rates - interbank rates at 7:30am, 05.09.24
Looking at yesterday's price action, markets feel very indecisive at the moment. Whilst we have some data out today, it seems that markets are waiting for Friday's job numbers to stir in a clearer direction.
The sentiment across our desk seems to be that a second consecutive month of poor jobs numbers will lead to a deterioration of market confidence.
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