USD: Limited impact from jobs data – Commerzbank

Commerzbank’s Volkmar Baur argues that the upcoming US labour market report is unlikely to shift expectations for Federal Reserve policy or materially reprice the Dollar. Markets have already scaled back 2026 rate-cut expectations, while inflation gauges and higher petrol prices keep pressure on the Fed. Baur notes that conflict-related uncertainty further limits the report’s forward-looking value for USD pricing.

Jobs data seen as low-impact risk

"It's that time again: the US labour market report is due. However, it is likely to be of only marginal interest today. Last week, the market priced in an interest rate cut by the end of the year."

"Just five days ago around two and a half interest rate cuts were still expected this year. But as things stand now, the market is only looking for one and a half now. This means that a lot would have to happen on the labour market today to reverse this trend."

"All in all, therefore, there is still no overall picture that necessarily calls for further interest rate cuts. Added to this is the fact that petrol prices in the at US this week were around 20% above the average price in February. If this continues throughout the month, it would add around 0.3 percentage points to the CPI alone."

"On the other hand, if the labour market surprises significantly on the upside, the impact on the market is also likely to remain minor. This is because these labour market figures were, of course, collected before the conflict began. It is therefore impossible to extrapolate anything forward."

"All in all, it is difficult to imagine that the market will significantly reprice the US dollar based on the labour market report – at least not as long as there is no end in sight to the conflict."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)