As markets debate the Fed’s next policy steps, updates on the U.S. labor market — which Fed members said they are watching closely — are sure to make market participants nervous.
On Thursday, a report was issued by Challenger, Gray and Christmas reversed 75,891 job cuts in Augustthe highest August total since 2009 (excluding 2020). Not only that, but hiring has now fallen to its lowest level since the company began tracking in 2005.
Link to Challenger Report for August
Later, a report from ADP Research showed that 99,000 new jobs were added in August.much weaker than the 144,000 gain that markets had expected.
And if that wasn’t weak enough, the July reading was also revised down from 122,000 to 111,000.
Fortunately, subsequent updates have not been disastrous for the US labor market.
the The Labor Department’s weekly initial jobless claims fell from 232,000 to 227,000. In the week ended August 30, it was less than the 231,000 increase analysts had expected.
Link to the Labor Department’s initial weekly unemployment claims report
The S&P Global Services PMI also showed an upward revision from 55.2 to 55.7.Details revealed that employment fell for the first time since August, but “The reduction in employment levels was only modest.“
Link to S&P Global Services PMI Final for August
Last but not least, The Institute for Supply Management’s services PMI improved slightly from 51.4 to 51.5. The August reading was above the expected 51.3. However, the employment index in the report fell from 51.1 to 50.2 during the month.
Link to August ISM Services PMI
US Dollar vs Major Currencies: 5 minutes
US Dollar Overlay Against Major Currencies Chart by TradingView
The US dollar, which was already weak in early European trading, fell sharply after a much weaker-than-expected ADP update supported deeper interest rate cuts by the Federal Reserve.
The US dollar started to find support when the weekly jobless claims report came in better than expected and then gained bullish momentum when the closely watched services sector PMIs did not disappoint as much as the ADP report did.
Unfortunately for USD traders, the greenback quickly fell, perhaps as traders took profits at the close of the European session and ahead of Friday’s US non-farm payrolls reports.