THINK Ahead: US jobs report and eurozone inflation data
The upcoming US jobs report is set to be a key determinant for the Federal Reserve's interest rate decision in October, with expectations of job gains around 100k and an unchanged unemployment rate of 4.1%. Per the full note , any deviation from these estimates may influence market sentiment towards Fed policy and the dollar's strength. Meanwhile, Eurozone inflation data will also be scrutinized, particularly for signs of persistent inflation beyond energy prices, which could have implications for ECB policy. With our current consensus favoring a dollar strengthening scenario, closely monitoring the jobs data on October 6 will be crucial to validating this outlook.
What the desk is arguing
The desk argues that the forthcoming US jobs report will play a pivotal role in shaping the Federal Reserve's monetary policy direction for October, indicating a probable interest rate hike. Per the full note , an addition of 100k jobs, alongside a stable unemployment rate at 4.1%, would provide the Fed with sufficient rationale to proceed with its tightening plans amidst a stronger labor market.
Supporting this view, the August jobs report surpassed expectations, giving rise to an overall bullish sentiment regarding the resilience of the US economy. However, downward revisions to previous figures could temper enthusiasm if the September report falls short of these expectations, while the interplay with upcoming inflation data will further shape trader assessment.
Where it sits in our coverage
Our consensus target for the USD/EUR pair is set at 1.075, within a range of 1.04 to 1.12. Notable targets include: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26)
This viewpoint aligns closely with our projections, particularly as the anticipated job growth and labor market stability solidify the rationale for a Fed interest rate hike. Given the spread, our current target is within the upper bounds set by jpmorgan.
How other firms see it
Market perspectives indicate a split stance; while jpmorgan and others are aligned on a stronger dollar, bofa presents a cautious outlook aligned with declining growth momentum.
Watch closely the USD/EUR dynamics, as shifts in sentiment from the labor data could send ripples across major currency pairs, reflecting ECB strategies as well. Key indicators include upcoming inflation figures which may influence these central bank policies.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01US jobs report expected to show 100k job gains, crucial for Fed's rate hike decision.
- 02Unemployment rate forecast to remain stable at 4.1%, supporting Fed's hawkish stance.
- 03Eurozone inflation data under scrutiny for second-round impacts beyond energy price fluctuations.
- 04Close watch on USD/EUR as jobs and inflation data drive market sentiment.
Market implications
Traders should monitor the USD/EUR level as the jobs report approaches, particularly the 1.075 consensus target. An unexpected result could lead to volatility and significant shifts in trader positioning ahead of the October Fed meeting.
Risks to this view
A significant miss on job additions or a rise in the unemployment rate could invalidate the current bullish outlook for the dollar, leading traders to reassess their positions ahead of the Fed's decision.
Articles THINK Ahead: US jobs report and eurozone inflation data Published 10:55 United States Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Next week's US jobs report will be closely watched for signals on the Fed's October rate decision, while eurozone inflation data will provide an update on underlying price pressures James Knightley and Bert Colijn We expect September's US jobs report to show 100k jobs added THINK Ahead in developed markets United States (James Knightley) Jobs Report (Fri): Financial markets have moved to price an October Federal Reserve interest rate hike as being more likely than not. There are two key reports that will largely determine what the Fed decides to do, with the first – the September jobs report – due on Friday. The August report was much stronger than expected after a subdued run.
Given that the low-hire, low-fire narrative remains in place, we expect a downward revision to that August number, with September coming in at around 100k jobs added. The unemployment rate is expected to hold at 4.1%. This outcome will keep an October rate hike in play.
The next key data release will be September inflation, due on 14 October. Eurozone (Bert Colijn) Inflation (Fri): Eurozone inflation continues to move mainly on energy prices at the moment. But with core inflation still at the same level as it was before the Middle East war started – 2.4% in both February and August – eyes will once again be on whether signs of second-round effects are kicking in.
Key events in developed markets Source: Refinitiv, ING "> Source: Refinitiv, ING THINK Ahead Content Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Authors James Knightley Chief International Economist, US James Knightley is the Chief International Economist in New York.
He joined the firm in 1998 in London and has been covering G7 and Western European economies. He studied economics at Durham… Bert Colijn Chief Economist, Netherlands Bert Colijn is ING's Chief Economist of The Netherlands. He joined the firm in July 2015 and covers the global economy with a specific focus on the eurozone.
Prior to this, he worked at The…
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