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20/08/24
51
USD Lower Slumps Before Powell Speech, Payrolls Revisions
On Tuesday, the US dollar dropped to its lowest level since Jan. as investors waited for Wednesday’s revised U.S. payrolls data and Fed Chair Jerome Powell’s comments at the Jackson Hole economic conference on Friday.
Traders are expecting the revisions to the U.S. government’s jobs data may show that between 600K and 1M fewer jobs were created between Apr. 2023 to Mar. 2024.
Bannockburn Global Forex’s chief market strategist, Marc Chandler, said a downward revision of 1M jobs would reduce employment creation from 2.6M to 1.6M jobs for the year.
Chandler said he thought that’s why the markets were still pricing in about a 25% chance of a 0.5% cut in Sept. People believed the Fed was behind the curve in hiking rates, and now many think the Fed was behind the curve in trimming rates.
Traders have decreased bets that the Fed would cut its overnight interest rate by 0.5% at its September meeting after strong retail sales and stronger-than-expected shelter inflation in July.
Data that showed the job market was weaker than believed previously may increase worries the U.S. economy was facing a potentially worse downturn than expectations for a “soft landing”.
In August, traders priced for imminent rate cuts aggressively after softer-than-anticipated job growth.
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