Markets increasingly confident about 'one-off' 50bp cut from Fed amid positive jobs data

Matthew Ryan, CFA Ebury

Market participants are becoming increasingly confident that the Fed’s 50bp cut will prove to be a one-off.

On Monday, FOMC chair Powell said, ‘This is not a committee that feels like it is in a hurry to cut rates quickly’, as he talked up the strength of the US economy and highlighted growing confident on restoring price stability.

As mentioned, markets have not completely ruled out the possibility of another 50bp cut, but this now seems contingent on a further deterioration in data, particularly out of the labour market, relative to the Fed’s expectations.

This week will see a dump of data out of the US jobs market, culminating in Friday’s nonfarm payrolls report for September.

The news that we’ve received thus far has been encouraging, with yesterday’s job openings data from JOLTS unexpectedly jumping back above 8 million (8.04M), its highest level in three months. Today’s ADP employment change number is next up, with economists pencilling in a modest bounce relative to August levels.

Author

Matthew Ryan, CFA

Ebury

Matthew is Global Head of Market Strategy at FX specialist Ebury, where he has been part of the strategy team since 2014. He provides fundamental FX analysis for a wide range of G10 and emerging market currencies.

EUR/USD recedes to daily lows near 1.1850

EUR/USD keeps its bearish momentum well in place, slipping back to the area of 1.1850 to hit daily lows on Monday. The pair’s continuation of the leg lower comes amid decent gains in the US Dollar in a context of scarce volatility and thin trade conditions due to the inactivity in the US markets.

GBP/USD resumes the downtrend, back to the low-1.3600s

GBP/USD rapidly leaves behind Friday’s decent advance, refocusing on the downside and retreating to the 1.3630 region at the beginning of the week. In the meantime, the British Pound is expected to remain under the microscope ahead of the release of the key UK labour market report on Tuesday.

Gold looks inconclusive around $5,000

Gold partially fades Friday’s strong recovery, orbiting around the key $5,000 region per troy ounce in a context of humble gains in the Greenback on Monday. Additing to the vacillating mood, trade conditions remain thin amid the observance of the Presidents Day holiday in the US.

Bitcoin consolidates as on-chain data show mixed signals

Bitcoin price has consolidated between $65,700 and $72,000 over the past nine days, with no clear directional bias. US-listed spot ETFs recorded a $359.91 million weekly outflow, marking the fourth consecutive week of withdrawals.

The week ahead: Key inflation readings and why the AI trade could be overdone

It is likely to be a quiet start to the week, with US markets closed on Monday for Presidents Day. European markets are higher across the board and gold is clinging to the $5,000 level after the tamer than expected CPI report in the US reduced haven flows to precious metals.

XRP steadies in narrow range as fund inflows, futures interest rise

Ripple is trading in a narrow range between $1.45 (immediate support) and $1.50 (resistance) at the time of writing on Monday. The remittance token extended its recovery last week, peaking at $1.67 on Sunday from the weekly open at $1.43.