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Hello everyone, today XM Foreign Exchange will bring you "[XM Official Website]: The three major employment data weakened across the board! Is there a risk of non-agricultural explosion tonight?" Hope it will be helpful to you! The original content is as follows:
On Thursday, the US dollar index stabilized and rebounded. As of now, the US dollar price is 90.08.
1. The United States recorded 54,000 people in August, lower than the expected 65,000 people, and the previous value was revised up from 104,000 to 106,000 people. The number of initial jobless claims last week rose to 237,000, the highest level since June.
2. Federal Reserve
① The US Department of Justice has launched a criminal investigation into Cook about the mortgage loan incident. ② Director-General nominee Milan: It is not recommended to hand over control of the Federal Reserve to the president.
③Williams: The risks faced by the job market are rising; predicting that interest rate cuts will become appropriate over time.
3. Trump signed an executive order to formally implement the US-Japan trade agreement, which will impose a 15% tariff on almost all Japanese goods.
4. World Gold Association: The gold ETF attracted 5.5 billion US dollars in August, and the outflow of Asia could not stop Europe and the United States from shopping.
We expect the Bank of England to maintain the policy interest rate at 4% at its September meeting, mainly considering the upward risks faced by inflation in the near future. It is currently predicted that the UK's overall inflation rate will reach an average of 3.4% in 2025, and will slow to 2.3% by 2026. However, in view ofIts economic activity continued to slow down and the labor market performed relatively weakly. We believe that the Monetary Policy oalcs.cnmittee (MPC) will maintain a loose policy tendency, while emphasizing a prudent and gradual easing path. We maintain the forecast of the terminal interest rate of this round of easing cycle of 3.5%, which is consistent with the estimated neutral range of policy interest rates of 3.3%-3.8%. MPC is expected to cut interest rates by 25 basis points in the fourth quarter of 2025 and the first quarter of 2026.
The current median new jobs in the upcoming U.S. non-farm report for August is 75,000, but of the 54 forecasts, 48 are concentrated between 60,000 and 100,000, with a distribution concentration higher than the historical level. Given that most institutions believe that the equilibrium point of the new non-agricultural population is between 50,000 and 100,000, if this report has little correction to the previous value. We believe that actual data if it is below 40,000 people may prompt market pricing for the Fed to cut interest rates by 50 basis points in September. Historical data show that the corrections of non-agricultural population are often procyclical, so if the data for the current month is weak, the previous value is likely to be downgraded. If we want to oalcs.cnpletely rule out the possibility of interest rate cuts in September, the number of non-agricultural people in August may record more than 130,000 and the previous value will be revised upward.
In addition, interpreting non-agricultural reports also requires incorporating unemployment rates. The market expects an unemployment rate of 4.% in August, but since the unemployment rate in July was only slightly below 4.25%, it shows that the market does not believe that there is a possibility of a surge in the unemployment rate. Therefore, we believe that except for the unusually weak performance of the new jobs, recording an unemployment rate of only 4.3% is not enough to push the Federal Reserve to decide to cut interest rates aggressively unless the actual data is released at 4.4% or above.
The US July JOLTs job vacancies released on Wednesday night further proves the weakness in the US labor market. The number of job vacancies dropped to 7.2 million that month, far exceeding market expectations. The moving average for the past three months shows that job openings remained at around 7.4 million, a slight decrease of 2.5% oalcs.cnpared to last year.
However, the job vacancy rate has continued to hover between 4.3% and 4.8% since the end of 2024, not far from the level before the outbreak of the epidemic. Data from the recruitment platform shows that the number of recruitment posts has stabilized in the past two months, and the proportion of small businesses planning to recruit has also risen slightly since the spring. In short, after being impacted by policy uncertainty at the beginning of the year, labor demand is showing initial signs of stabilization, but the overall trend is still weak.
In addition, the recent decline in job vacancies and the unemployment rate has risen, resulting in a drop in the ratio of job vacancies to unemployed people in July to 0.99. This is the first time that the ratio has fallen below 1.0 since the economy is still in the recovery phase of the epidemic in 2021. This deterioration highlights the gradual erosion of the originally healthy labor market in the Fed's process of curbing inflation in the past few years. CutThe employee rate remained unchanged at 1.1%, consistent with the sideways trend of the number of people applying for unemployment benefits for the first time, indicating that the oalcs.cnpany is still unwilling to give up its existing employees. But at the same time, oalcs.cnpanies are also cautious in recruiting new employees. The recruitment rate in July remained stable at 3.3%, continuing to hover at the lowest level in the past decade after ruling out abnormal changes in the epidemic.
Overall, although the job market has not deteriorated significantly, the current balance remains fragile. Amid the continued slowdown in recruitment activities, low layoffs remain a key support for maintaining oalcs.cn employment growth. Although economic policy uncertainty has eased since the spring, slowdown in consumer spending and tariff-related cost pressures will continue to prompt oalcs.cnpanies to seek reduction options, and labor cost control will still face pressure.
Europe/USD technical analysis
Europe and the United States continue to fluctuate and consolidate within the established range. To be honest, due to the release of non-farm data on Friday, the market fluctuations are expected to be limited on Thursday - most traders may wait for the data to land before laying out large positions. The 50-day exponential moving average below forms support with the 1.16 level, while the 1.18 level above forms resistance.
Dollar/JPY Technical Analysis
The United States and Japan rose slightly, ignoring the bearish pattern of "Shooting Stars" formed in the previous trading day. But also affected by the approaching non-agricultural data, I remain cautious about today's market expectations. The price is currently firming above the 200-day exponential moving average, which is undoubtedly a positive signal. If the daily closing can recover the 148.50 level, it may indicate further upside potential. Although the long-term bullish view remains unchanged, it is still at the upper edge of the volatile range.
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