Calm Before the Storm: Asian Markets Steady as Dollar Gains Ahead of Crucial US Jobs Report

Global Markets Brace for Crucial US Jobs Report Amid Rate Cut Speculations

Last Updated: Sep 02, 2024 | 7:00 AM IST

Asian markets started quietly on Monday, with investors anticipating key economic data releases, including a pivotal U.S. jobs report that could influence the magnitude of an expected Federal Reserve rate cut. A holiday in the U.S. and Canada led to thin market liquidity, while political uncertainties arose from gains by far-right parties in German state elections.

The U.S. dollar retained its strength after robust spending data reduced the likelihood of a 50-basis-point rate cut by the Federal Reserve. Current futures indicate a 100% certainty of a 25-basis-point cut on Sept. 18, with a 33% chance of a larger, 50-basis-point cut. Projections include 100 basis points of cuts by December and 120 basis points by 2025.

The Bank of Canada is expected to announce a rate cut on Wednesday, with a 22% market-implied probability of a 50-basis-point reduction.

All eyes are on the U.S. payrolls report due Friday, where a gain of 165,000 jobs and a slight drop in the unemployment rate to 4.2% are anticipated. Barclays economist Christian Keller noted that a strong report is unlikely to prevent a September rate cut, while a weak report could prompt further aggressive cuts.

Federal Reserve Governor Christopher Waller and NY Fed President John Williams will provide market reactions post-data. Other significant data releases include ISM surveys, JOLTS job openings, ADP employment, trade figures, and the Fed’s Beige Book.

Market cautiousness led to minor dips in S&P 500 and Nasdaq futures. Asian markets largely followed Wall Street’s positive trend, with Japan’s Nikkei gaining 1.0% and South Korean stocks remaining stable. Currency movements saw the U.S. dollar supported at 146.55 yen, while the euro hovered at $1.1046 amid German political concerns.

The ECB is set to cut rates by a quarter point next week, but future policy remains uncertain.

Gold prices, pressured by a stronger dollar and higher bond yields, traded at $2,502 an ounce. Oil prices declined as markets weighed potential OPEC+ supply increases, with Brent crude at $76.50 per barrel and U.S. crude at $73.17 per barrel.

Original Story https://www.business-standard.com/markets/news/asian-share-mkts-off-to-a-quiet-start-dollar-firm-ahead-of-us-jobs-report-124090200033_1.html
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