Created
: 2025.09.01
2025.09.01 19:20
The US Labor Day holiday and the closed US Treasury market make it a little difficult to infer what investors make of Friday's federal appeals court ruling that President Donald Trump's universal tariffs were illegal. The finding here supports a May ruling from the Court of International Trade that the President had overreached by using an emergency powers act to back the tariffs. At the heart of the ruling is the need for congressional oversight on major economic decisions like these. What happens now? The appeals court ruled that the tariffs can remain in place for the time being, but it is unclear whether the case will move to the Supreme Court or down to the trade court, ING's FX analyst Chris Turner notes.
"Global trading partners will no doubt find it premature to be celebrating just yet, but we'll be interested in seeing whether the Treasury market comes under any further pressure if the US has to hand back already received tariff revenues. This all comes at a time when the long end is under pressure from the President's pursuit of the Federal Reserve's Lisa Cook. Away from politics, it's an important week for US labour market data. Wednesday sees job opening JOLTS data, followed by the ADP employment report on Thursday, and then the big August jobs report on Friday. Recall it was the July jobs report - and especially the 258,000 or downwards back month revisions - which reversed the July rally in the dollar and was the catalyst for Fed Chair Jerome Powell opening the door to a September rate cut."
"The market now prices an 88% probability of a rate cut on 17 September. ING's call is for three Fed rate cuts this year versus just 56bp of easing currently priced. If we're right, this week's jobs data could add to downside for short-term US rates and the dollar. Once again, expect a lot of focus on the back-month revisions, given that only 60% of survey respondents are answering within the first month. Currently, consensus sits at a fairly soft +75k for Friday's number, and sees the unemployment rate ticking up to 4.3% from 4.2%."
"The week also sees ISM business survey readings and the Fed's release of the Beige Book (Wednesday), which may provide further insights on price pressures and the labour market across the Fed's 12 districts. This week's data could well see DXY break 97.50 support, below which only 97.20 stands between DXY and a test of the year's low at 96.38."
Created
: 2025.09.01
Last updated
: 2025.09.01
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