Meanwhile, the Automatic Data Processing (ADP) report on private sector employment reflected a decline of –32.0K after –3.0K previously, versus forecasts of 50.0K. At the same time, JOLTS job openings in August rose from 7.208M to 7.227M, slightly below the estimate of 7.200M. Analysts note that cooling in the labor market was one of the key factors behind the Fed’s decision to cut rates by 25bps in September. Fed Chair Jerome Powell warned against premature conclusions, stressing that further policy easing would depend on incoming macroeconomic data. Experts now expect borrowing costs to fall by another 40bps by year-end. In Europe, investors are assessing September inflation data: core CPI stood at 2.3% as expected, while headline inflation accelerated from 2.0% to 2.2%. Additional support for the euro came from business activity data: in Germany, the manufacturing PMI rose to 49.8 versus 48.5 forecast, while in the eurozone as a whole it reached 49.8 compared to 49.5 expected. Analysts stress, however, that growth is mainly driven by defense spending and Germany’s large infrastructure projects, while many industrial sectors remain stagnant.
GBP/USD
The pound strengthens in the GBP/USD pair during the morning session, maintaining a short-term uptrend as the instrument tests 1.3480 for a breakout higher, although trading activity remains muted. Investors are reluctant to open new positions amid heightened uncertainty after the U.S. government shutdown forced most federal employees into unpaid leave. This is not the first shutdown in U.S. history: during Donald Trump’s first term, the government closed for a record 34 days. Democrats blame Republicans for pushing cuts in social programs and healthcare spending. A prolonged crisis could delay key economic releases, complicating the Fed’s decision-making process.
Even so, the Fed is expected to remain cautious despite the rapid labor market cooling. ADP private employment data released yesterday showed a drop of 32.0K, with the August figure revised from 54.0K to –3.0K, against expectations of 50.0K. On the other hand, U.S. manufacturing activity showed improvement: the ISM PMI rose from 48.7 to 49.1, slightly above expectations, while the ISM employment index climbed from 43.8 to 45.3. In the U.K., however, the S&P Global manufacturing PMI fell from 47.3 to 46.2. On Friday at 15:20 (GMT+2), BoE Governor Andrew Bailey will speak and may provide guidance on the outlook for future rate cuts. At its September meeting, the Bank kept rates at 4.00%, but officials warned of growing inflation risks, projecting acceleration in September from August’s 3.8% peak.
AUD/USD
The Australian dollar trades mostly flat against the U.S. dollar in the AUD/USD pair during the Asian session, consolidating around 0.6620. Investors are focused on August trade data: exports fell 7.8% after a 2.5% rise, while imports grew 3.2% after –2.4%. As a result, the trade surplus narrowed sharply from AUD 6.61B to AUD 1.83B, well below the forecast of AUD 6.50B. The export decline is linked to high costs amid U.S. tariff policy and weak Chinese data. Earlier this week, Australian PMI data showed mixed results: the S&P Global manufacturing PMI dipped from 53.0 to 51.4 (vs. 51.6 forecast), while AiG’s manufacturing index fell further from –13.9 to –16.0. However, construction activity improved, with the index rising from 1.0 to 12.3. In the U.S., ISM manufacturing PMI in September increased from 48.7 to 49.1, slightly above expectations. Today at 14:30 (GMT+2), U.S. jobless claims data will be released: initial claims are expected to rise from 218K to 223K, while continuing claims are seen increasing from 1.926M to 1.930M. This report precedes Friday’s official labor market release.
USD/JPY
The U.S. dollar posts a slight rebound in the USD/JPY pair during Asian trading, correcting after a strong bearish rally that pushed prices to September 17 lows. The pair is testing 147.20 as traders close some shorts ahead of Friday’s U.S. jobs data at 14:30 (GMT+2). Analysts expect nonfarm payrolls to show a 50.0K increase, double last month’s result, with average hourly earnings rising 0.3% MoM and 3.7% YoY, while unemployment is seen steady at 4.3%. In Japan, unemployment data will be published tomorrow at 01:30 (GMT+2), with forecasts pointing to a slight increase from 2.3% to 2.4%. At 03:05 (GMT+2), BoJ Governor Kazuo Ueda will speak and may comment on further monetary tightening this year. Markets are also eyeing Japan’s LDP leadership election on October 4, with the winner expected to succeed Shigeru Ishiba as prime minister. Yen sentiment today is supported by an uptick in consumer confidence to 35.3 from 34.9, above preliminary estimates.
XAU/USD
Gold consolidates around 3870.00 in the XAU/USD pair during the Asian session, as investors lock in profits ahead of Friday’s U.S. jobs report at 14:30 (GMT+2). The data previously triggered the Fed’s 25bps cut in September. Fed Chair Jerome Powell noted that future decisions remain data-dependent, while inflation risks persist — with U.S. tariffs under President Trump potentially adding pressure.
Additional support for gold came from the U.S. government shutdown that began October 1 after Congress failed to approve the budget. Democrats demand extending social programs and resist healthcare cuts, while Republicans push for broad spending reductions. Geopolitical risks also support safe-haven demand: peace talks in Eastern Europe remain distant, while reports of drones flying over EU states bordering Ukraine have raised tensions. Some EU members call for stronger measures to defend airspace. Today at 14:30 (GMT+2), U.S. jobless claims data are due: initial claims are expected to rise from 218K to 223K, with continuing claims edging up from 1.926M to 1.930M.