US nonfarm payrolls
The trend is clear as the US labor market has been easing after a strong rebound in the post-Covid era. That is to be expected but we are now approaching the level in which marketers had expected this to continue on soft ground in the US economy from last year.
Instead, the US economy has been relatively resilient and that has also been reflected by the labor market – even if things are getting easier there.
As the Fed tries to stop the rate cutting cycle, this will be a key area to watch in the coming months. If the labor market situation continues next to the inflation data, it will confirm the Fed's outlook to stay on the sidelines while allowing Trump's policies to play out.
But if the data worsens, there will be cause for concern to pressure the Fed to resume rate cuts to start the new year.
Given the stakes, this will be the agenda item in today's trade. Nothing else will be as important.
For now, Fed currency futures are ruling out a 25 bps rate cut for later this month with ~93% pricing in the fact that the Fed will keep rates unchanged. The first full rate cut is only priced for June with a total of ~42 bps priced for this year. It is the movements, if any, in prices here that will dictate broader market sentiment before we reach the weekend.
