For US market sentiment and the dollar, this is striking at a rather unfortunate timing. Just when you thought the dollar is finally stabilising and the Fed might look to extend the pause in September, all of this is coming to shake things up now. And that has seen market pricing now pricing in a rate cut for September.
Going back to the ISM report yesterday, there are a couple of standout points.
Typically, these components do well to track the potential impact on non-farm payrolls (h/t @ ING). However, the correlation hasn't been as strong since the Covid pandemic. That being said, the directional bias is still very much intact.
As the ISM employment components track lower, it just means that we should expect to see further softness in the labour market in 2H 2025.
Tariff concerns will take the blame here and that might complicate things for the Fed. The question now though is how much will policymakers want to look through this and associate it as being just a temporary thing.
As things stand, inflation concerns arising from tariffs are expected to be more of a passthrough rather than it being permanent. If so, that shouldn't stop the Fed from cutting rates. However, it is worth to keep tabs on this to see how things develop in the months ahead especially.
This article was written by Justin Low at investinglive.com.Hence then, the article about us data worries starting to rear its ugly head again was published today ( ) and is available on forex live ( Middle East ) The editorial team at PressBee has edited and verified it, and it may have been modified, fully republished, or quoted. You can read and follow the updates of this news or article from its original source.
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