Insights 
VT 
The US jobs engine just hit a rough patch, and markets are already bracing for the Fed to slam on the brakes.
August’s non-farm payrolls report came in at just 22,000 new jobs, a sharp deceleration from July’s 79,000. Unemployment crept up to 4.3 percent, marking the highest level seen in years. This wasn’t exactly a shocker.
Earlier, the September 3 JOLTS report already pointed to trouble: job openings dropped to 7.18 million, their lowest since late 2024. The signals were there, and now the confirmation is here.
With manufacturing and trade shedding positions and overall labor demand cooling, the Fed is being pushed into a corner. Markets reacted quickly.
According to the CME FedWatch Tool, there’s now a 100 percent probability of a rate cut at the September 17 meeting. That’s baked in. What’s changed is how far markets expect the Fed to go: odds for another cut in October are sitting at 79.5 percent, and December’s chances are rising too at 73.3 percent.
That’s a dramatic shift. Just a few weeks ago, most investors were still debating whether the Fed would ease again at all this year. Now, the narrative has flipped. Traders are no longer wondering if more cuts are coming; they’re asking how many.
A lot of that has to do with Powell’s tone at Jackson Hole. The Fed Chair didn’t just mention jobs; he put them front and center. After two years of hammering inflation, he acknowledged that risks have shifted toward the labor side.
Governor Waller echoed that urgency, saying outright that cuts should begin immediately. It’s clear now that the Fed sees a weakening job market as the more immediate risk, even though inflation remains above the 3 percent mark.
That makes the September FOMC meeting one to watch for rate outcomes, but more importantly for the dot plot. In June, the Fed’s projections still penciled in two rate cuts for 2025. That feels outdated now.
After this NFP print, we could see the dots shift lower, signaling three cuts instead of two. Policymakers will still want to tread lightly. Headline inflation hasn’t broken convincingly lower yet, but softening the dot plot gives them room to maneuver without committing too far ahead.
In the markets, reactions have been mixed. The S&P 500 surged at first on rate cut hopes but quickly lost steam and settled near 6,480.
The failed breakout shows that while investors welcome easier policy, they’re also starting to worry about what’s driving it. Rate cuts for the sake of growth are one thing. Rate cuts because the wheels are coming off? That’s a different story.
The dollar took a hit too. The US Dollar Index (USDX) sank below 97.40 after the data, before rebounding slightly to trade around 97.65. The drop reflects collapsing yield expectations, but it wasn’t a full breakdown. For now, the dollar remains in a holding pattern. A decisive move below 97.30 could tip the scales further.
Bitcoin continues to behave like a textbook risk asset. It jumped to 113,000 USDT after the NFP release but failed to hold the rally, sliding back to consolidate around 110,900.
With equities wobbling, BTC is likely to stay range-bound between 109,500 and 111,500 for now. Sentiment remains cautious, and without a clear lead from stocks, crypto may continue to chop sideways.
Looking ahead, September’s CPI reading on the 11th and the FOMC decision on the 17th will be the real catalysts. If inflation drops below 3 percent, expect more conviction from markets on the October and December cuts.
If price pressures stay sticky, especially in core components, the Fed may be forced to hit pause before December, keeping the door open for further easing in early 2026 instead.
Until then, the market is stuck between two narratives: optimism that the Fed can steer the landing, and growing concern that the runway is getting shorter.
Key Movements This Week
The past week saw a wave of reactive price action ripple across FX, commodities, and indices as markets absorbed the latest US labour market miss and braced for the key macro catalysts ahead.
The US Dollar Index moved as expected post-NFP, slipping lower after breaking 97.409, then bouncing near 97.35 as it attempted to reclaim higher ground. Price action is now hovering just below 97.90, a key area where bulls will want to see a decisive close.
EURUSD pushed higher in response to the softer dollar backdrop. After forming a new swing high, the pair found resistance near 1.1755. The rejection at that level halted further upside for now.
GBPUSD also followed the directional bias, making a new swing high before rolling over. As the pair trades lower into the week, the 1.3475 level becomes the next important price zone to monitor for signs of renewed interest from buyers.
USDJPY remains in its consolidation phase, with price flirting above the recent 148.939 high before pulling back. With the pair still range-bound, eyes are now on the 148.00 handle as a possible re-entry point for buyers.
USDCHF followed the playbook almost perfectly. After hitting a weekly high from the monitored 0.8090 zone, the price retraced and found support at 0.7960. The rebound from there has set up a new area of interest near 0.8015.
AUDUSD and NZDUSD both caught downside momentum. Aussie dropped from the 0.6590 resistance area and now eyes 0.6515 for potential support. Kiwi followed suit, falling from the 0.5930 zone and tracking toward 0.5850.
USDCAD bucked the dollar weakness trend and moved higher after the NFP release, breaking cleanly through local resistance. Traders are watching for follow-through above 1.3880.
Oil struggled last week, pulling back from the 66.45 zone and now tracking toward 61.15. With demand expectations softening alongside global growth concerns, traders are starting to question whether crude can hold its recent uptrend.
Gold is waiting. After reacting to the post-NFP drop in yields, the metal is now consolidating. Price action at 3530 will be critical. A strong bullish setup there could open a path toward 3650, especially if CPI prints softer and the dollar stalls.
The S&P 500 mirrored the broader risk tone. The index made a new swing high but failed to extend, pulling back and closing below 6,500. A retest of that level now becomes the line in the sand for bulls.
Bitcoin continues to behave more like a sentiment barometer than a safe haven. It dropped toward the lower edge of the 114,400 zone and has yet to show decisive direction. Price is hovering near 112,350, where bulls may attempt to defend again.
Natural gas has slipped lower once more after failing to break out above the 3.04 zone. Price is now eyeing 2.91 and potentially 2.87 next. With cooling demand and no clear catalyst, nat gas remains in a technical downtrend for now.
Across the board, markets are recalibrating. The weak jobs print changed the tone, but this week’s CPI and the FOMC next week will decide whether traders double down on the dovish pivot or rein in expectations.
Key Events of the Week
On Wednesday, 10 Sep, the US Producer Price Index (PPI) month-over-month is forecast to rise 0.3 percent, cooling from July’s 0.9 percent. The drop would support the case for weakening inflation momentum, especially if it aligns with soft labor conditions.
If the US Dollar Index has indeed finished its upward consolidation, this number could nudge it lower again. That said, any upside surprise may revive short-term dollar bids.
Thursday, 11 Sep, brings two big prints. The Eurozone’s Main Refinancing Rate is expected to remain flat at 2.15 percent. That’s no change from the prior reading, but with inflation still sticky and growth slowing, the tone of the accompanying press conference will matter more than the number itself.
Traders will likely treat the policy language as a signal of whether the European Central Bank will hold the line or join the global dovish pivot.
Meanwhile, US CPI year-over-year is forecast to accelerate to 2.9 percent from 2.7 percent. If the data comes in below expectations or stays flat, markets may take it as a green light for the Fed to proceed with a full rate-cut cycle.
On Friday, 12 Sep, the UK takes the spotlight with GDP month-over-month expected to stall at 0.0 percent, down from 0.4 percent. That’s a weak signal, and if confirmed, it could increase pressure on the Bank of England ahead of its upcoming policy decision.
Weak GDP might reduce the odds of further hikes or even accelerate discussion around rate stability. Sterling could come under pressure if paired with soft CPI the week after.
Rounding out Friday’s session is the University of Michigan Prelim Consumer Sentiment Index, forecast at 58.0 versus 58.2 previously.
While not a market mover on its own, a surprise drop could reinforce recession worries. With consumers driving the bulk of US GDP, any sharp swing here may contribute to risk-off trading heading into the weekend.
