FOREX: USD Reverts Lower Following Soft JOLTS Jobs Report
Sep-03 16:56
- It was a tale of two halves for G10 currency markets on Wednesday, as initial greenback strength reversed and subsequently extended lower following a softer-than-expected US JOLTS jobs report, stoking the softening labour market narrative as we approach Friday’s release of non-farm payrolls.
- The USD index is roughly 0.3% lower on the session as we approach the APAC crossover, with GBP and AUD marginally outperforming while the likes of CAD and CHF remain closer to unchanged on the day.
- Initial sterling weakness saw GBPUSD print a near one month low of 1.3333, however, greater stability for risk and the associated reversal lower for UK Gilt yields helped underpin a solid GBP recovery. Cable rose around 120 pips to 1.3450 amid these dynamics erasing a solid portion of the steep declines from Tuesday’s session.
- For AUD, there was a more resilient tone across the entire session following Australian Q2 GDP coming in stronger than both the RBA and consensus expected. Additional hawkish comments from RBA’s Bullock helped underpin the Aussie rally, which has seen AUDUSD close within close proximity of 0.6569 resistance. Clearance of this level would expose key resistance and the bull trigger at 0.6625, the Jul 24 high.
- Additionally, AUDNZD strength continues to stand out, reaching fresh cycle highs today above 1.1140. A breach of the key 1.1180 mark would place the cross at the highest level since late 2022. Above here, 1.1250 marks a significant 76.4% retracement point of the 2022 selloff.
- USDJPY nicely respected Fibonacci resistance at 149.12, printing a high of 149.14 during early European trade. Following that, waning dollar momentum and the subsequent price action following the US data helped USDJPY eventually back below the 148 handle. Heightened political uncertainty in Japan allows USDJPY to hold onto its 100 pip advance this week.
- Swiss CPI kick starts tomorrow’s calendar before US ADP, jobless claims and ISM Services PMI are released.
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US OUTLOOK/OPINION: GS Still See 3x2025 Cuts But Don’t Rule Out 50bp Resumption
Aug-04 16:55
Goldman Sachs stick with their call for three consecutive 25bp cuts starting in September after Friday’s weak payrolls report, but with two-sided risk from either a delay or a 50bp cut in September. Their call supports substantial further dollar depreciation.
- Writing after Friday’s weak payrolls report, where they see underlying monthly job growth of 28k in July vs current breakeven estimates of 90k, Goldman Sachs see the scene set for Fed easing as “downside risks seem to be materializing.”
- “Our call remains for three consecutive 25bp cuts in September, October, and December (followed by two more 25bp cuts in 2026H1).”
- “A delay is possible if upcoming reports show bigger-than-expected price hikes and a rebound in the labor market. But a 50bp cut in September is also possible if the unemployment rate rises again in the August employment report or initial jobless claims increase from their still-low level.”
- “Even after Friday’s front-end rally, our funds rate forecast remains below market pricing, especially on a probability-weighted basis” [their recession scenario with 35% probably has rates hitting 1.25-1.5% in 2026 vs a terminal 3-3.25% in the baseline].
- They see this call supporting “long positions at the front end of the US yield curve as well as substantial further dollar depreciation. In broad real trade-weighted terms, the dollar is still 15% stronger than its long-term average, the current account shows a deficit of 4% of GDP, and interest rate differentials are turning less dollar-supportive on the back of US labor market weakness and resilience elsewhere, including in Europe”.
OPTIONS: Larger FX Option Pipeline
Aug-04 16:53
- EUR/USD: Aug06 $1.1500-10(E1.6bln), $1.1550-65(E1.2bln); Aug07 $1.1500(E1.1bln), $1.1600(E957mln); Aug08 $1.1500(E1.5bln)
- USD/JPY: Aug06 Y147.00($1.3bln), Y152.00($1.0bln); Aug07 Y147.65($1.1bln), Y148.00-15($1.8bln), Y148.50($1.2bln)
- EUR/GBP: Aug08 Gbp0.8675(E1.3bln), Gbp0.8700(E1.2bln)
- AUD/USD: Aug07 $0.6500(A$1.1bln), $0.6600(A$2.0bln); Aug08 $0.6500(A$4.2bln)
PIPELINE: Corporate Bond Update: $2B FISERV 2Pt, $1.5B Quanta 3Pt Launched
Aug-04 16:48
- Date $MM Issuer (Priced *, Launch #)
- 08/04 $2B #FISERV $1B +5Y +87, $1B 10Y +107
- 08/04 $1.5B #Quanta Services $500M Each: 3Y +65, +5Y +80, 10Y +93
- 08/04 $1.25B Level 3 Financing 8.5NC3
- 08/04 $1B #Altria $500M 5Y +85, $500M 10Y +112
- 08/04 $600M #CenterPoint Houston 10Y +80
- 08/04 $Benchmark KKR & Co. 10Y +115a
- 08/04 $Benchmark Chub Holdings 10Y +70
- 08/04 $Benchmark Public Service of Colorado 10Y +120a, 2055 Tap
- 08/04 $Benchmark Dominion Energy 30.5NC5.25 6%, 30.5NC10.25 6.2%
- 08/04 $Benchmark Barclays 4.25NC3.25 +83, 4.25NC3.25 SOFR, 21NC10 +110
