The US-Japan Trade Agreement officially comes into effect, focusing on non-agricultural employment reports

On September 5, during the Asian session on Friday, spot gold trading around $3,542/ounce, gold prices fell on Thursday as traders took profit after a record rise. The focus is now turning to the US non-farm employment report to find new clues to the Fed's policy path; U.S. crude oil trading around $63.30/barrel, oil prices fell about 1% on Thursday to a two-week low as U.S. crude oil inventories unexpectedly increased last week, and the market expects OPEC+ oil-producing countries to raise their production targets at the meeting this weekend.

The US dollar rose slightly on Thursday, with market trends fluctuating this week, and investors focused on key employment reports released on Friday. Previous data showed that the labor market was softer, strengthening expectations for the Federal Reserve to cut interest rates this month.

Data released by the U.S. Department of Labor shows that the number of initial unemployment claims increased by more than expected last week, reflecting the continued cooling of the labor market. At the same time, the ADP National Employment Report showed that the growth rate of private jobs in the United States in August was lower than market expectations.

StateStreet's senior global market strategist in Boston said that the market is volatile and investors tend to adjust positions before Friday's data is released rather than betting on the direction of the bet as there are still questions about the economy. ”

The U.S. dollar index rose 0.20% to 98.334, down the previous trading day. The team led by Goldman Sachs analyst Karen Fishman pointed out that if the non-farm employment report is stronger than expected, the U.S. dollar will usually strengthen across the board;It is lower than expected, and analysts wrote in the report, "In view of the downward trend in labor market risks and our expectations of the Fed's more dovish, we recommend shorting the US dollar/JPY with a target of 142 yen."

Several Fed officials recently said that weak job markets remain their main reason for supporting future rate cuts, which further boosts market expectations for a rate cut this month. The Federal Reserve will hold a policy meeting from September 16 to 17.

According to CME’s FedWatch tool, traders currently expect the probability of the Fed’s rate cut this month to be close to 100%, up from 87% a week ago.

In the bond market, global long-term bond yields generally rose, reflecting investors' concerns about the fiscal situation of major economies such as Japan, the United Kingdom and the United States.

U.S. Treasury yields fell, with the two-year Treasury yield falling 1.8 basis points to 3.594%; the 10-year Treasury yield fell 3.1 basis points to 4.18%. The highly-watched 30-year treasury bond bidding auction was successfully oalcs.cnpleted on Thursday.

Asian market

Prince Bank of the Philippines: Inflation is expected to be on the rise, but it will be strictly controlled within the target range of 3.0% + 1.0 percentage points.

European market

European retail sales in the euro zone fell -0.5% month-on-month in July, and greater than expected decline of -0.2%. Food, beverage and tobacco sales fell by -1.1%, while automobile fuel purchases fell by -1.7%. Non-food sales rose only slightly by 0.2%, almost offsetting the overall weakness.

In the entire EU, sales fell -0.4% month-on-month. The differences between member states were significant: Croatia (-4.0%), Estonia (-2.0%) and Germany (-1.5%) saw the largest declines, while Lithuania (+1.5%), Latvia (+1.4%) and the oalcs.cnherlands (+1.1%) recorded growth.

Swiss consumer prices fell in August, with overall CPI falling -0.1% month-on-month, which was flat below expectations. Excluding fresh food products and energy, the core CPI also fell by -0.1% month-on-month, as domestic and imported products prices fell by -0.1% month-on-month.

On the year, the inflation rate is stable at only 0.2%, in line with expectations. Core CPI further slowed to 0.7% from the previous 0.8%. Domestic price growth slowed from 0.7% to 0.6%, while import prices contracted -1.3% year-on-year, slightly improved from -1.4% in July.

The data confirm that inflation in Switzerland remains unusually sluggish. However, the risk of deflation is not imminent. This makes it less urgent for the Swiss National Bank to resume negative interest rates at present.

U.S. market

U.S. service industry activity rebounded in August, and the ISM service industry purchasing managers index rose from 50.1 to 52.0, slightly higher than the expected 50.9. Overall growth is supported by a stronger demand situation, highlighting the economyUncertainty lingers, but the industry’s resilience. ISM noted that the reading corresponds to an annualized growth of 1.1% of GDP.

Details show that business activity rose from 52.6 to 55.0, while new orders jumped sharply from 50.3 to 56.0, a strong growth rate since the beginning of the year. This improvement highlights a rebound in demand momentum as oalcs.cnpanies prepare for the holidays, with some reportedly sourcing ahead of tariff-related prices rising.

However, the employment index is still in a contraction state at 46.5, indicating that the service industry recruitment continues to be weak. Meanwhile, the backlog of orders fell to its lowest point in 16 years, weakening optimism about the durability of demand. Prices remained at a high of 69.2, above 60 for the ninth straight month, indicating that the industry-wide cost pressure continues.

ISM said respondents' oalcs.cnments were mainly tariff concerns, and oalcs.cnpanies emphasized evidence that higher input costs and import demand were advanced.

The number of initial unemployment claims in the United States increased by 8 to 237 in the week ending August 30, higher than expected by 232. The four-week moving average of initial jobless claims rose 2.5 to 231.

As of the week ended August 23, the number of people who continued to apply for unemployment benefits fell by -4k to 1940k. The four-week moving average of the number of people who continue to apply for unemployment benefits fell -7k to 1947k.

U.S. private employers added 54 jobs in August, lower than expected 72, according to ADP. The oalcs.cnmodity production industry created 13 positions, while the service industry added 42 positions. Recruitment by oalcs.cnpany size increased slightly across the board, with small oalcs.cnpanies increasing by 120,000, medium oalcs.cnpanies increasing by 250,000, and large oalcs.cnpanies increasing by 180,000.

Wage dynamics are mixed. Wages for workers remained stable at 4.4% year-on-year, while wages for workers changed jobs increased by 7.1%, slightly faster than 7.0% in July.

ADP chief economist Nela Richardson said the recruitment momentum was “shocked by uncertainty”, citing factors such as labor shortages, weak consumer demand and potential disruptions from the adoption of artificial intelligence. The data have heightened concerns that job creation is losing momentum ahead of Friday’s official non-farm jobs report.

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