Nonfarm Payrolls Quick Analysis: USD set to fall, Gold and stocks to rise as labor lands softly

• US hiring remains slow, with a modest Nonfarm Payrolls increase of 187,000 in August on top of a downside revision.
• The data cements the notion that the Federal Reserve is done raising interest rates. 
• Markets are set to celebrate the lack of evidence of an imminent recession.

Some 40 million planes land safely every year. Such soft events are not news, but when it is the world's largest economy rather than flights, it is big news for financial markets. America's labor market continues to grow, yet critically, at a slower pace that strikes the perfect balance for inflation to fall and economic growth to persist.

The US reported an increase of 187,000 positions in August, marginally above expectations, but at a slower pace than pre-pandemic levels. Moreover, July's figure was revised down to 157,000, an adjustment which screams "soft landing."

Wage growth slowed – only 0.2% growth on month in August, which is an annualized rate of 2.5%. Year on year, wage growth is only 4.3%, also below estimates. 

A soft landing in the making

The economic calendar showed an expected increase of 170,000 positions in August, similar to the figures originally published for July. Real estimates were somewhat lower after a series of disappointing data released ahead of the publication, most notably ADP's first miss after several beats.

Federal Reserve Chair Jerome Powell left the door open to additional rate hikes in his Jackson Hole speech. However, he stressed that the Fed should progress "carefully." The world's most powerful central bank does not want to break a global economy that is looking more fragile.

American growth is leading the world, and "fragile" would be an overstatement. Nevertheless, wage growth is not hot enough to cause fears of inflation, and job growth continues to moderate.

The Fed still has nearly three weeks until its September meeting – and the all-important Consumer Price Index (CPI) report to consider ahead of its decision. Nevertheless, it would take an extraordinarily high CPI to cause the bank to hike rates again in September.

It may be early, but the most recent report also points to a lower chance of a hike in November – nor any more increase in the coming years. The NFP helps cement the notion that the Fed is done. This is a favorable situation for stocks and Gold, and adverse for the US Dollar. 

It would take much worse figures to scare markets of an imminent recession, resulting in a stock sell-off and a surge in demand for the safe-haven US Dollar. Could this happen? Perhaps, but not right now.