When the markets are hotly debating the Fed’s next policy moves, U.S. labor market updates – which Fed members said they’re looking closely at – are guaranteed to make market players jittery.
On Thursday, a report from Challenger, Gray, & Christmas reflected 75,891 planned job cuts in August, the highest August total since 2009 (excluding 2020). Not only that, but year-to-date hiring has also fallen to its lowest total since the company started tracking in 2005.
Link to the August The Challenger Report
Later, a report from ADP Research showed a net of 99K job additions in August, much weaker than the 144K increase the markets had expected.
If that’s not weak enough, July’s reading was also revised lower from 122K to 111K.
Luckily, the succeeding updates weren’t as doomsday-y for the U.S. labor market.
The Labor Department’s weekly initial jobless claims eased from 232K to 227K in the week ending August 30, fewer than the 231K increase that analysts had expected.
Link to Department of Labor’s weekly initial jobless claims report
S&P Global’s final services PMI also showed an upward revision from 55.2 to 55.7. Details revealed that employment fell for the first time since August, but that “the reduction in staffing levels was only modest.”
Link to S&P Global’s August final services PMI
Last but not least, ISM’s services PMI improved slightly from 51.4 to 51.5 and exceeded expectations of a 51.3 reading in August. However, the report’s Employment Index dipped from 51.1 to 50.2 for the month.
Link to ISM’s August services PMI
U.S. dollar vs. Major Currencies: 5-min
Overlay of USD vs. Major Currencies Chart by TradingView
The U.S. dollar, which was already seeing weaknesses in early European session trading, dropped sharply at the much weaker-than-expected ADP update as it supported deeper interest rate cuts from the Fed.
The Greenback started finding support when the weekly jobless claims report came in better than expected and then gained bullish momentum when the closely watched services PMIs didn’t disappoint as much as the ADP report did.
Unfortunately for USD bulls, the dollar soon traded lower, possibly as traders took profits around the European session close and ahead of Friday’s U.S. NFP reports.