Friday's job numbers were a mixed bag: we saw fewer job additions than expected, an unemployment dip of 4.2%, and a wage growth 3.8% higher than projected. However, it's worth noting that last month's payroll number received a downward adjustment.
At one point, following the numbers, markets increased their odds of a 50 bps rate cut by up to 50%; however, as the afternoon progressed sentiment shifted towards a 25 bps cut. Fed member Waller later commented advocating for 'front-loading' rate cuts.
USD finished the day stronger, and GBP fell off its highs from earlier in the day.
*Daily move - against G10 rates at 7:30am, 09.09.24
** Indicative rates - interbank rates at 7:30am, 09.09.24
Focus this week will fall on the UK job numbers release due on Tuesday morning; US CPI on Wednesday afternoon and the ECB rate decision on Thursday.
UK labour market data is expected to report average earnings (including bonus) of 4.1% and a slightly lower unemployment rate at 4.1%. With markets expecting US CPI to ease to 2.6%, year-on-year, while the core number remains 3.2%, CPI could determine what action the Fed takes this month.
The ECB is widely expected to cut interest rates by another 0.25%, which is fully priced in by money markets. Therefore action on the EUR will be dictated by forward guidance and forecasts. Another potential catalyst for market movement is the US presidential debate between Kamala Harris and Donald Trump tomorrow evening.
The USD is kicking off the week strong, building on Friday's momentum as market sentiment increasingly favours a 25 basis point rate cut by the Fed this month.
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