After the US jobs report last week, the big picture focus in markets is now on major central bank decisions. In particular, the Fed next week will be the most anticipated one. The odds for a 50 bps rate cut are now at ~29% and down from roughly a coin flip at one point last week. The Fed blackout period has begun, so it would be safe to assume that policymakers are comfortable with a 25 bps move at this stage.
The dollar is keeping steadier as such, with some calm permeating back through markets. The overblown fears surrounding the US labour market are ebbing, so that is perhaps helping. That alongside the Fed’s own calm demeanour I would say.
That will make for a bit of a pensive week as we await the FOMC meeting next week. The ECB is on the agenda on Thursday but there shouldn’t be any fireworks. A 25 bps rate cut is well orchestrated already. Besides that, we will have the latest US CPI report tomorrow. But hey, what is inflation data these days?
Looking to the session ahead, we do have UK labour market data to work with. But again, there is a large caveat attached to the data as seen last month here. So, I wouldn’t put too much emphasis into it. Other than that, there will just be some light data to move things along on the day.
0600 GMT – Germany August final CPI figures
0600 GMT – UK July ILO unemployment rate, employment change
0600 GMT – UK July average weekly earnings
0600 GMT – UK August payrolls change
1000 GMT – US August NFIB small business optimism index
That’s all for the session ahead. I wish you all the best of days to come and good luck with your trading! Stay safe out there.