Employment Situation throws Buck a wrench

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Employment Situation throws Buck a wrench

SEPTEMBER 03, 2021

The U.S. Dollar lost ground this week as the mood of recovery took hold of markets that are expecting the globe to overcome the worst of Delta and the virus overall for what remains of the year. 

Overview

As regions across Europe and the Australian continent revive activity, global investors are betting that risk can be taken on. At the time of writing, the release of the Employment Situation revealed a much worse labor situation than anyone expected, which is only crushing the dollar further.

The Change in Non-Farm Payrolls was awful, with expected added jobs of 733K coming in at 235K. The Unemployment Rate remained at 5.2% for August, but Average Hourly Earnings did go double the estimate expanding by 0.6% instead of just 0.3% as forecast. Clearly, the Fed will see this as a sign that they can hold off any moves to taper, much less increase interest rates. Thus far, the reaction is very dollar negative.

Purchasing Managers Index Figures will be out at 9:45 AM, which could further cement that indeed August was a month of a major slowdown. We shall see how much action we get ahead of the Labor Day weekend.

What to Watch Today…

  • No major economic events scheduled for today

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EUR  

The Euro is rallying as the dollar falters in the face of underwhelming and shockingly poor labor data out of the U.S. Meanwhile, European Central Bank officials are suggesting that there may be room for cutting back on all the ECB has thrown at the financial environment. Additionally, PMI figures from earlier in the European trading session showed that France, Italy, and Spain are coming out of their economic struggles as investment expands.

The only thing affecting the overall Euro-zone composite reading is that Germany slipped a bit. September will be a major test of how sustainable these levels can be for the shared currency.

GBP  

Sterling looks to be rising despite lower PMIs than expected as the U.S. tries to figure out why the job numbers were way off. August saw the U.K. try to overcome Delta with lockdowns that recently have been lifted and made a difference for business. While we enter a crucial period of the year, we shall see if trade between U.K. and EU ports creates any havoc that settles Pounds in these levels.

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