The Job Openings and Labor Turnover Survey (JOLTS) report for July 2024 is scheduled to be released today, September 4, 2024, at 10:00 a.m. Eastern Time. This report, published by the U.S. Bureau of Labor Statistics, is a key indicator of labor market health, providing insights into job openings, hires, and separations. Traders closely watch this report as it can influence market movements and provide clues about the Federal Reserve’s future monetary policy decisions.
AUD Weakens
The Australian Dollar (AUD) has taken a hit against the U.S. Dollar (USD) following the release of weaker-than-anticipated Australian GDP data. According to the Australian Bureau of Statistics (ABS), Australia’s Gross Domestic Product (GDP) grew by a mere 0.2% quarter-on-quarter (QoQ) in the second quarter (Q2) of 2024, slightly higher than the 0.1% growth in the first quarter. However, this figure fell short of the anticipated 0.3% increase. Adjusted for population growth, GDP contracted on a per capita basis for the sixth consecutive quarter, setting a new record.
AUDUSD 4-HOUR CHART
Focus on RBA Governor’s Speech
Moving ahead, traders are keenly awaiting the upcoming speech by Reserve Bank of Australia (RBA) Governor Michele Bullock on Thursday. The speech is expected to provide more insights into the central bank’s hawkish stance on monetary policy. Additionally, economic indicators such as the ISM Services PMI and Nonfarm Payrolls (NFP) will be closely monitored to gauge the potential size of an expected rate cut by the Federal Reserve this month.
EUR/USD Holds Steady Ahead of JOLTS Report
Pair Defends Bids Amid Soft US Data
EUR/USD is defending bids at around 1.1050 during the European session on Wednesday. The pair remains supported due to weak US PMI data, which has led to USD softness. However, risk aversion could cap the pair’s upside ahead of the US JOLTS Job Openings data release.
Technical Outlook and Market Reaction
After closing marginally lower on Tuesday, EUR/USD holds steady near 1.1050 during European trading hours on Wednesday. The pair’s technical outlook suggests a bearish bias remains intact. The negative risk mood has helped the USD stay resilient against its major rivals, making it difficult for EUR/USD to stage a rebound.
The US Bureau of Labor Statistics is set to release JOLTS Job Openings data for July later in the day. Market expectations place job openings at 8.1 million. A significant deviation from this figure could trigger a substantial market reaction, with a higher number boosting the USD and a lower reading potentially limiting its upside.
GBP/USD Under Pressure Amid Risk-Aversion
Struggling Near 1.3100
GBP/USD is under pressure near 1.3100 in European trading on Wednesday. The pair struggles to capitalize on the US Dollar’s weakness amid a risk-averse market atmosphere. The upcoming US jobs data, following the ISM Manufacturing PMI miss, is eagerly anticipated by investors.
Short-Term Outlook and Upcoming Data
GBP/USD dropped to its lowest level in over a week below 1.3100 on Tuesday but managed to close the day above this level. It trades marginally higher in the European session on Wednesday as investors await the next catalyst. The US Dollar showed no immediate reaction to the ISM Manufacturing PMI data on Tuesday, which edged higher to 47.2 in August from 46.8 in July. The risk-averse market atmosphere reflects the sharp decline seen in Wall Street’s main indexes, allowing the USD to hold its ground and forcing GBP/USD to stretch lower.
In the European session, US stock index futures are down between 0.15% and 0.6% on the day. If safe-haven flows continue to dominate the action in financial markets in the second half of the day, GBP/USD could have a difficult time extending its rebound.
JPY Strengthens on Jibun Bank Services PMI
Japanese Yen Edges Higher
The Japanese Yen (JPY) continues to strengthen against the US Dollar (USD) following the release of the Jibun Bank Services PMI data on Wednesday. The index was revised to 53.7 in August from an initial estimate of 54.0. Although this marks the seventh consecutive month of expansion in the service sector, the latest figure remains unchanged from July.
Monitoring Market Developments
Japan’s Yoshimasa Hayashi is closely monitoring domestic and international market developments with urgency. The USD receives support as traders adopt caution ahead of US employment data, particularly the August Nonfarm Payrolls (NFP). This data may provide further insights into the potential timing and scale of Federal Reserve rate cuts.
Bank of Canada Rate Cut Expectations
Policy Rate Reduction Anticipated
There is widespread expectation that the Bank of Canada (BoC) will lower its policy rate for the third consecutive meeting on September 4. Mirroring previous decisions by the central bank, this move would likely be a 25 basis point cut, taking the benchmark interest rate to 4.25%.
Since the year began, the Canadian Dollar (CAD) has been weakening against the US Dollar (USD), taking USD/CAD to fresh highs near 1.3950 in early August. However, the Canadian currency has started a period of sharp appreciation, dragging the pair around 5 cents lower by the end of the previous month.
Inflation and Market Outlook
In July, the annual rate of domestic inflation, as measured by the headline Consumer Price Index (CPI), declined further to 2.5% compared to the same month in 2023. The BoC’s core CPI fell further below the 2.0% target, recording a 1.7% increase over the last twelve months. The expected rate cut by the central bank seems linked to the ongoing decrease in consumer prices and anticipated further easing in the Canadian labor market.
Gold Extends Losses Despite Market Sell-Off
Gold Trades Lower
Gold (XAU/USD) trades marginally lower on Wednesday, hovering around the $2,490s. Market sentiment remains negative following the global sell-off triggered by weak US manufacturing data on Tuesday and fears about the Artificial Intelligence (AI) tech bubble bursting.
Upcoming Economic Data
Gold also fails to capitalize on the significant rise in market-based probabilities of the US Federal Reserve opting for a larger 0.50% interest rate cut at its September 18 meeting. Wednesday sees the release of US JOLTS Job Openings, which are forecast to show a decline to 8.1 million in July from 8.184 million in June. A more pronounced decline in openings could raise concerns regarding the state of the jobs market and further increase the chances of the Fed making a larger 0.50% cut.
ADP Employment Change and Jobless Claims follow on Thursday, but the main event on the calendar will be US Nonfarm Payrolls (NFP) on Friday. If NFPs increase less than expected, it would further support the case for a larger rate cut.
Geopolitical Developments
On the geopolitical front, there are no major flare-ups that could lead to increased demand for Gold. Although Russia launched a large missile and drone attack on Ukraine on Tuesday, killing 50 people in Poltava, it follows days of similar bombardments.
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