Select Language

USD: Spanner in the works - Commerzbank

Breaking news

USD: Spanner in the works - Commerzbank

  • X
  • facebook
  • LINE
  • RSS

  • X
  • facebook
  • LINE
  • RSS
New update 2025.08.05 18:54
USD: Spanner in the works - Commerzbank

update 2025.08.05 18:54

The US labor market report for July has thrown a spanner in the works, dashing my speculation that the Fed might not cut interest rates in September after all. Now it looks more likely than ever. Between now and the next Fed meeting on September 17, there is still one labor market report and two inflation reports to come. Of course, anything can happen - especially on the inflation front if the tariffs finally come into force this week. However, it is unlikely that the next labor market report will be surprisingly good, and it is also doubtful that the tariffs will have a significant impact on inflation so soon after they come into force. This would make the arguments in favor of an interest rate cut in September overwhelming, Commerzbank's FX analyst Antje Praefcke notes.

Downside risks for the dollar clearly dominate at present

"To make matters worse, US President Trump continues to massively erode confidence in the decisions of the US administration. If a labor market figure doesn't fit, the head of the BLS is simply fired. Of course, one can always argue about the collection, analysis, and interpretation of data. But such actions tend to smack of "if it doesn't fit, make it fit" and further undermine the credibility of statistics and data sets. I would just like to recall similar incidents in Turkey in the past."

"In addition, the personnel changes in the Board of Governors could now shift more quickly in favor of a more dovish Fed, in line with Trump's demands, after Ms. Kugler announced her early retirement. One more vote on the board does not necessarily mean an immediate interest rate cut, as there are a total of seven board members and five regional central bank presidents who are eligible to vote. Nevertheless, with the nomination of a suitably loyal candidate - especially in view of the latest labor market data, see above - the Fed is likely to become more inclined to cut interest rates. Or there could be internal power struggles within the FOMC, which the market would certainly view critically."

"All in all, therefore, these are not good news but rather bitter pills for the dollar, especially if other macroeconomic data also deteriorates noticeably and the arguments in favor of interest rate cuts become stronger. The only hope for a possible correction then remains the US stock markets. If they collapse, Trump could take countermeasures to calm investors' heated tempers, at least partially and for a short time. However, the downside risks for the dollar clearly dominate at present."


Date

Created

 : 2025.08.05

Update

Last updated

 : 2025.08.05

Related articles


Show more

FXStreet

Financial media

arrow
FXStreet

FXStreet is a forex information website, delivering market analysis and news articles 24/7.
It features a number of articles contributed by well-known analysts, in addition to the ones by its editorial team.
Founded in 2000 by Francesc Riverola, a Spanish economist, it has grown to become a world-renowned information website.

Was this article helpful?

We hope you find this article useful. Any comments or suggestions will be greatly appreciated.  
We are also looking for writers with extensive experience in forex and crypto to join us.

please contact us at [email protected].

Thank you for your feedback.
Thank you for your feedback.

Most viewed

PBOC sets USD/CNY reference rate at 7.1409 vs. 7.1366 previous

On Wednesday, the People's Bank of China (PBOC) set the USD/CNY central rate for the trading session ahead at 7.1409 as compared to the previous day's fix of 7.1366 and 7.1797 Reuters estimate.
New
update2025.08.06 10:15

WTI recovers to above $65.50 as US crude inventories drop

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $65.65 during the early Asian trading hours on Tuesday. The WTI recovers some lost ground after the American Petroleum Institute (API) showed US crude oil inventories fell last week.
New
update2025.08.06 10:08

NZD/USD gathers strength above 0.5900 after New Zealand's employment data

The NZD/USD pair edges higher to near 0.5910 during the early Asian session on Wednesday. The New Zealand Dollar (NZD) strengthens against the US Dollar (USD) after data shows New Zealand's Unemployment Rate came in better than expected.
New
update2025.08.06 09:18

GBP/USD flatlines, Pound Sterling churns the waters as BoE rate call looms

GBP/USD continues to chalk in a middling pattern through the week as investor sentiment takes a breather following a sharp readjustment of economic expectations last week.
New
update2025.08.06 08:51

USD/CAD holds steady above 1.3770, Carney announces support measures for lumber industry

The USD/CAD pair flat lines near 1.3770 during the early Asian session on Wednesday. The Canadian Dollar (CAD) trades unchanged against the US Dollar as crude oil prices decline, and data show a widening of the Canadian trade deficit, which was close to expectations.
New
update2025.08.06 08:20

EUR/USD holds steady near 1.1570 as markets digest Fed outlook

The EUR/USD holds firm during the North American session on Tuesday, with traders still digesting the latest employment figures in the United States (US) and the release of further US data.
New
update2025.08.06 08:09

Canada's Foreign Minister says trade talks with US continue to be constructive

Canadian Foreign Minister Anita Anand said late Tuesday that the officials agreed to build a work plan between Canada and Mexico to focus on supply chains, energy security and others.
New
update2025.08.06 07:55

New Zealand's Unemployment Rate rises to 5.2% in Q2 vs. 5.3% expected

New Zealand's Unemployment Rate rose to 5.2% in the second quarter (Q2) from 5.1% in the first quarter, according to the official data released by Statistics New Zealand on Wednesday. The figure came in below the market consensus of 5.3%.
New
update2025.08.06 07:46

Gold price eyes $3,400 as Fed cut bets grow, Trump eyes new Fed pick

Gold price advances during the North American session as speculation grows that the Federal Reserve (Fed) could begin to cut rates at the next meeting. At the same time, investors await US President Donald Trump's appointment of a new Fed Governor. The XAU/USD trades at $3,381, up 0.20%.
New
update2025.08.06 05:20

Crude Oil markets jitter as US-Russia sanctions debacle heats up

West Texas Intermediate (WTI) Crude Oil prices snapped back and forth during the American market session on Tuesday, before ultimately settling lower as barrel traders struggle to find reasons to remain bullish on Crude Oil demand.
New
update2025.08.06 05:04

Disclaimer:arw

All information and content provided on this website is provided for informational purposes only and is not intended to solicit any investment. Although all efforts are made in order to ensure that the information is correct, no guarantee is provided for the accuracy of any content on this website. Any decision made shall be the responsibility of the investor and Myforex does not take any responsibility whatsoever regarding the use of any information provided herein.

The content provided on this website belongs to Myforex and, where stated, the relevant licensors. All rights are reserved by Myforex and the relevant licensors, and no content of this website, whether in full or in part, shall be copied or displayed elsewhere without the explicit written permission of the relevant copyright holder. If you wish to use any part of the content provided on this website, please ensure that you contact Myforex.

  • Facebook
  • Twitter
  • LINE

Myforex uses cookies to improve the convenience and functionality of this website. This website may include cookies not only by us but also by third parties (advertisers, log analysts, etc.) for the purpose of tracking the activities of users. Cookie policy

I agree
share
Share
Cancel