Fed 'has little choice but to cut' rates in September

We’ve seen an extraordinarily topsy-turvy few days for the dollar, which rallied sharply throughout the week before being whipsawed following the release of Friday’s payrolls report.

The Federal Reserve had struck a hawkish note following its meeting on Wednesday, as Chair Powell both talked up the strength of the jobs market and hinted that it was in no rush to ease policy again.

In a rare turn of events, two FOMC officials did, however, vote for an immediate cut - the first time that two governors had dissented at the same meeting in over thirty years.

This dovish dissent, as it turns out, was far from unfounded. On face value, the July payrolls print is not a big cause for alarm, although this was completely overshadowed by the almost unfathomably large downward revisions to the May and June figures totalling 258k.

This has both almost entirely changed our view on the US jobs market, while completely shifted the narrative for the Fed, which now seems will have little choice but to cut in September.