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Tepid US jobs report opens doors for deeper rate cuts

Tepid US jobs report opens doors for deeper rate cuts

The argument for deeper interest rate cuts by the Federal Reserve was reinforced on Friday after hiring in the United States stumbled in August.

Total nonfarm payrolls disappointed market expectations by rising 130,000 versus the 160,000 forecasts. When considering how the figure was boosted by 25,000 temporary government workers because of the upcoming US consensus count, the underline jobs growth was only 105,000. Although unemployment rate held steady at 3.7% and average hourly earnings increased by 0.4% month-on-month, the sore spot in the report was the soft headline NFP figure. Concerns over weakness in the US labour market threatening consumer spending should fuel speculation over the Fed cutting interest rates again beyond September.

Appetite towards the Dollar took a slight hit following the jobs report with the Dollar Index trading around 98.11 as of writing. Sustained weakness below 98.50 should encourage a decline towards 98.00 in the week ahead.

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