26/07/2024
Written by: Ian Morley
Summary:
The latest JOLT job openings report displayed resilience in the job market, with openings slightly declining to 8,756,000 rather than the projected 8,730,000. However, there were no gains for the USD as Federal Reserve speakers tempered recent hawkish interest rate expectations. Daly and Mester suggested that three rate cuts this year remained a “reasonable baseline.”
Speeches:
Market Insight:
Friday’s payroll figures remain the central focus for markets this week, particularly for those anticipating further gains for the USD. Today’s release includes the ADP payroll data and ISM services index. Any data supporting the narrative of US economic resilience should lead to minor USD gains, although its strongest levels for the year may be limited. Before that, attention turns to March’s EU inflation report, which could impact expectations of an ECB rate cut in April, potentially weakening the EUR.
Analysis:
With market expectations of a June Fed rate cut now at 50%, the USD index encountered resistance at its 2024 highs. The key question now is what catalysts are needed for another upswing in the USD. Current pricing in money markets suggests three rate cuts are still possible this year, and a reduction in total expected cuts may be necessary to drive further USD strength.