Fed Rate Cut Calls, Would NFP Tilt The Odds?

Tuesday, 3 September 2024, 16:00 – US ISM Manufacturing PMI (Aug)

The latest data for the U.S. ISM Manufacturing PMI, released on August 1, 2024, shows a decline to 46.8, down from 48.5 in June. This marks the sixth consecutive month of contraction (a reading below 50) and remains well below the historical average of 52.88. The continued contraction indicates ongoing challenges in the U.S. manufacturing sector, driven by weak demand, a drop in production, and cautious investment behavior among companies due to the current monetary policy environment. Given the recent trend, the upcoming data is likely to remain in contraction territory which potentially around mid-40s.

Wednesday, 4 September 2024, 15:45 – BoC Interest Rate Decision

On July, the Bank of Canada (BoC) announced a 25-basis-point cut in its benchmark interest rate, reducing it to 4.5%. This was the second consecutive rate cut, following a similar move in June. The decision was largely driven by signs of cooling inflation and a slowing economy. In June, inflation in Canada eased to 2.7%, providing the BoC with the confidence that price pressures were abating. Additionally, there were indications of a slowdown in the labor market and retail sales, further supporting the decision to lower rates. Looking ahead, many economists expect the BoC to continue cutting rates gradually throughout the year, with some predicting the policy rate could reach 4% by the end of 2024. However, the upcoming meeting is unlikely to surprise regarding the current interest rate, as most analysts anticipate another rate cut likely in September.

Thursday, 5 September 2024, 14:15 – US ADP Nonfarm Employment Change (Aug)

The latest ADP Nonfarm Employment Change for July showed an increase of 122,000 jobs, which was below the forecast of 147,000 and significantly lower than the previous month’s figure of 209,000. This slowdown in job creation suggests a cooling labor market, which could be a response to rising interest rates and tightening financial conditions aimed at controlling inflation. Businesses are becoming more cautious with hiring amid economic uncertainties and are expected to continue given the recent signal from Federal Reserve. Therefore, the upcoming release is expected to continue showing slower job growth.

Friday, 6 September 2024, 14:30 – US Nonfarm Payrolls (Aug)

The U.S Nonfarm U.S. Nonfarm Payrolls (NFP) data for July 2024 showed an increase of 114,000 jobs, which is significantly lower than the average monthly gain of 215,000 jobs over the prior 12 months. The lower-than-expected NFP figure attributed to several factors which include ongoing uncertainties in the global economy and the impact of rising labor costs may have contributed to the slower job growth. For the upcoming report, the data is expected to continue reflecting economic challenges with job growth remain subdued. Additionally, any significant deviation in the upcoming ADP data which is often seen as a precursor to the official NFP data could further influence expectations for the next NFP release.