September jobs report may show labor market is on the mend — but it's far from cured
The upcoming September jobs report is anticipated to reflect a labor market still navigating a phase of restrained hiring and firing, indicating that while some improvement is present, full recovery remains out of reach. This backdrop of muted labor mobility may give pause to those watching for aggressive monetary policy adjustments, especially as the Federal Reserve assesses ongoing labor trends. Moving forward, market participants will be keenly focused on how this data may impact the dollar's trajectory amid mixed sentiments.
Where it sits in our coverage
Our consensus EUR/USD target sits at 1.075 (median across 8 firms), with Goldman at the upper bound (1.12) and BofA at the lower (1.04). Marketwatch's interpretation aligns closely with the expectations of firms anticipating modest labor market improvements.
How firms align
JPMorgan's target of 1.10 reflects a somewhat optimistic outlook on labor trends, which aligns with the impression that the labor market is indeed making strides. In contrast, BofA's cautious stance with a target of 1.04 suggests skepticism regarding the extent of recovery, highlighting a divergence in sentiment on labor data impacts.
What the data shows
Forecast revisions have indicated a slight uptick in expected job growth, although still within a safe margin of the long-term average. Recent research from our internal sources suggests that while jobs numbers may improve, significant barriers to employee turnover remain, potentially impacting overall economic momentum.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01The labor market is gradually improving but still far from normal levels.
- 02This report may set the tone for USD stability or volatility depending on data outcome.
- 03A strong job report could push EUR/USD towards 1.10, while a weak result may shift it below 1.04.
Market implications
Traders should focus on the upcoming jobs report, as any significant deviation from expectations could lead EUR/USD to test key psychological levels around 1.075 and 1.10. Pay attention to market positioning ahead of the release, as sentiment may shift swiftly based on the results.
Risks to this view
A shockingly negative jobs report could invalidate the optimistic view and lead to a retracement in expectations, placing downward pressure on the dollar. Should the Fed react to persistent weakness in labor data, this could further deepen the USD's vulnerabilities.
Sentiment by currency
USD~EUR~JPY~GBP~Composite USD score: +0.00
Sources & References
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