USD: Unimpressed dollar – Commerzbank

The revision of US employment figures for the period from April 2024 to March 2025 was eagerly awaited, especially after last Friday's US labor market report had come as such a big disappointment. The figure was a negative surprise: the data from the Bureau of Labor Statistics was expected to be revised by around 680,000 (meaning that a total of 680,000 fewer jobs were created in the above-mentioned period than previously reported), but the actual revision was 911,000, or -0.6%. The average revision over the last 10 years was 0.2%, so the revision for April 2024 to March 2025 is unusually high, Commerzbank's FX analyst Antje Praefcke notes.

Inflation in the US has risen moderately

"But in the end, the dollar was unimpressed by the data. For good reason? First of all, the data is a look in the rearview mirror. It relates to a period in the past. Markets, however, usually look ahead. After last week's poor labor market report for August, but especially after the already disappointing report for the previous month, the market had already significantly adjusted its expectations regarding the key interest rate in the US."

"In the meantime, the market even sess the chance of a 50 basis point move by the Fed. Yesterday's revision of past data may make a larger move seem somewhat more likely now. But in general, it did not bring any major new insights that would have justified another massive adjustment of expectations and thus a noticeable movement in the dollar. It's all water under the bridge."

"What matters now is what the price data signals, whether the first effects of tariffs are already slowly becoming apparent. Today, the market will therefore be looking closely at producer prices to find out whether companies are already seeing the first price increases as a result of the tariffs. More important, however, are consumer prices, which will be published tomorrow. In recent months, inflation in the US has risen moderately, most recently standing at 2.9% (headline rate) and 3.1% (core rate) year-on-year. This trend is likely to continue, but without indicating significant price pressure that could prevent the Fed from cutting interest rates next week."