Sluggish manufacturing industry leads to fluctuations, and employment data becomes the focus of the market

On Tuesday, S&P Global Manufacturing PMI final value data revealed a weak trend in manufacturing, the news quickly triggered a chain reaction in the financial market, with the prices of various asset prices plummeting sharply, and traders’ concerns about the economic outlook significantly heated up. Against this backdrop, the U.S. non-farm employment data to be released on Friday undoubtedly became one of the focus of market attention this week, and is expected to provide important clues to the direction of interest rate cuts in September.

ADP Employment Report Release

The ADP employment report, known as the “small non-agricultural”, will be released on Thursday. In the July report, the number of new ADP jobs fell unexpectedly, and wage growth also fell to a three-year low. This series of data is seen as a signal of a slowdown in the U.S. labor market and strengthened market expectations for the Federal Reserve’s interest rate cut in September.

However, economists generally predict that the number of ADP employment in August will rebound from 122,000 in July to 148,000, indicating that the employment market may be gradually recovering. ADP chief economist Nela Richardson pointed out that the slowdown in wage growth reflects the labor market being adjusted in line with the Fed’s efforts to curb inflation.

Non-agricultural data becomes the key to the rate cut in September

Federal Chairman Powell has previously made it clear that he will launch a cycle of interest rate cuts to cope with weaker job markets. cityIt is generally believed that the probability of the Fed cutting interest rates by 25 basis points at its September meeting is 69%, while the probability of cutting interest rates by 50 basis points is 31%. This week’s employment data, especially the non-farm employment report, are seen as key to breaking this debate on the rate cut.

Charu Chanana, head of foreign exchange strategy at the well-known institution Saxo, analyzed that if the non-farm data is significantly lower than expected, the possibility of a 50 basis point cut will increase significantly, which may put downward pressure on the US dollar exchange rate.

The Bank of Canada’s third rate cut is almost a foregone conclusion

At the same time, the Bank of Canada is also in a critical period of policy adjustments. After the second consecutive rate cut in July, facing a slowdown in economic growth, rising unemployment and continued decline in inflation, the market generally expects the Bank of Canada to cut interest rates again at this month’s meeting.

This expectation may not only lead to a depreciation of the Canadian dollar, but also reflects the central bank’s determination to maintain a highly easing monetary policy. It is worth noting that Canadian employment data will be released simultaneously with the US non-farm report on Friday, and its performance may further affect market expectations for the monetary policies of the two countries.

This week, weak manufacturing, subtle changes in the job market, and policy decisions of central banks will have a profound impact on market trends. Traders need to pay close attention to the key economic data to be released in an upcoming manner in order to adjust their investment strategies in a timely manner to deal with possible market volatility.