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Walk out of the thorns, there is a bright road covered with flowers; when you reach the top of the mountain, you will see the cloudy mountain scenery like green clouds. In this world, a star falls and cannot dim the starry sky, a flower withers and cannot desolate the whole spring.
Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange Decision Analysis]: The ECB's interest rate cut is postponed to next year! Today's CPI is difficult to change its policy path." Hope it will be helpful to you! The original content is as follows:
On Monday, the US dollar index was under pressure and lowered due to the rising bets on the Fed's interest rate cut and the increasing concerns about its independence. As of now, the US dollar is priced at 97.84.
1. Tariffs
①Trump: India has proposed to lower the tariffs to zero, but it is too late. India should have done this a few years ago.
② Source: India plans to lower the GST tax on about 175 types of goods.
③Bester: Trump may declare a national housing emergency this fall, and the plan may include exemptions from building materials. Confidant that the Supreme Court will support Trump's tariff policy.
2. Becente: Milan is likely to take office before the Federal Reserve meeting in September.
3. The Houthi armed forces announced the list of high-level leaders who were killed in the attack, with a total of 12 people.
4. The German Defense Minister refuted von der Leyen's remarks to send troops to Ukraine: she lacks authorization.
5. The EU said that the GPS system of the plane von der Leyen was interfered with, and suspected that it was done by Russia.
The US non-farm report released in July caused market shock, and the data in May and June were significantly revised downward to show that the US labor forceThe market suddenly deteriorated sharply since May, causing employment growth to almost stagnate, while only rebounded slightly in that month by 73,000 people, down 40,000 from the average of the previous four months. However, key indicators such as unemployment rate, job opening ratio, and JOLTS have not proved this deteriorating trend. But this eye-catching non-farm reports still prompted Fed Chairman Powell to send signals that the policy tone is about to change at the Jackson Hall meeting.
We believe that the non-agricultural report released on Friday is of decisive significance to judging market conditions, but we need not only pay attention to the August data, but also the direction of correction of the July data. We currently expect non-farm growth of 68,000 people in August, confirming a slowdown in demand but not collapse. Discussions on labor supply have increased significantly recently. The total labor force has continued to decline since the January benchmark revision brought about an abnormal growth of 2.2 million people (733,000 people since March), which has stabilized the unemployment rate in the range of 4.1%-4.2% since February. The unemployment rate is expected to remain at 4.2%, but given the unrevised value in July of 4.24%, the upward risk of actual data cannot be ignored.
Finally, we believe that the hourly wage annual rate may be recorded at around 4%, which means that the hourly wage monthly rate may be recorded at 0.3%, but given the high base effect of 0.5% in August last year, the annual rate may drop from 3.9% to 3.7%. If the report shows that the labor market has strengthened significantly, the Federal Reserve may remain silent at its September meeting against market expectations, but if it is confirmed that the labor market has taken a sharp turn for the near future, it may open a rate cut cycle of about 100 basis points.
We expect the US to record 70,000 new non-farm population in August, of which the private sector employment growth was 80,000, which is highly consistent with the performance in July. Although the recent growth rate of new non-agricultural population has slowed down www.barborka.infopared to the beginning of the year, there has been no sharp slowdown similar to that shown in the May and June data corrections. The unemployment rate last month recorded 4.2%, very close to the critical point of 4.3%. We expect the unemployment rate to be 4.2% in August, due to the continued decline in break-even inflation rate; on the other hand, the labor force participation rate may be further under pressure. The average hourly wage continues to grow trend, and weekly working hours are expected to remain stable.
It is expected that the number of non-farm employment in the United States will increase by 70,000 in August, and government employment may be affected by the continuous impact of "DOGE". At the same time, the calendar effect will also bring downside risks to employment in the education department of local governments, which is expected to decrease by 15,000. Private sector employment is expected to increase by 85,000, some of which are supported by the adjustment of the birth and death model (RNBD). The risks brought by residual seasonal and seasonal adjustment factors this month are bidirectional. Overall, we believe that under this special calendar configuration, the non-seasonal adjustment data in the August employment report will beThere is a tendency to correct downward. The extent of the previous month's revision (which may be quite significant) will mainly depend on the deviation from the expected August's actual data.
In addition, it is expected that the monthly hourly wage rate in August may be recorded at 0.4%, mainly due to the calendar effect pushing up the monthly data and suppressing the growth rate of wages in September. If not revised, this will result in a slight drop in the annual rate of hourly wages to 3.81%. Weekly working hours are expected to remain at 34.3 hours, but there is marginal uncertainty in this judgment - if it is revised down to 34.2 hours, it indicates that the continued weak labor demand is driving the labor market to continue to cool down.
In terms of the unemployment rate, it is expected to rise slightly to 4.26%, and the current 4.248% value is at the critical point of upward revision to about 4.3%. Labor force participation rate (LFPR) is expected to rise slightly to 62.3%, with a limited rebound www.barborka.infopared to recent declines. Although the number of household surveyed jobs fell by 260,000 in July and the six-month moving average showed a deep weakness in the labor market losing 132,000 jobs per month, we still expect the rebound in household surveyed employment data to drive up LFPR.
It is expected that the US will add 60,000 new non-agricultural population in August. The main reason for the continued rise in employment is that big data indicators show that although the growth rate of private sector employment is still weak, it has increased www.barborka.infopared with the previous period. However, employment in government departments is expected to record zero growth, with federal employment dropping by 20,000, and employment in state and local governments remain unchanged. In addition, the initial value of employment data in August has continued to show negative deviations over the past decade. It may become the main reason for dragging down the number of new non-agricultural people.
In addition, the unemployment rate after rounding is expected to rise slightly to 4.3% (the unrevised value in July was 4.248%), reflecting a ease in other labor market slack indicators, but the surge in employment of new entrants in July pushing up the unemployment rate could be partially reversed. The average hourly wage is expected to increase by 0.3% month-on-month (after seasonal adjustment), slightly affected by the positive calendar effect.
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