Payrolls were pretty much right in line with expectations with the number of US jobs increasing by 128k in the month of August compared to an upwardly revised 121k in the month of July. With the market so short US dollars going into the number, the confirmation of a triple digit and higher than previous gain created a relief knee jerk rally in the dollar.
Looking beyond the headlines however, we see continued evidence of easing inflation. Average hourly earnings rose a meager 0.1 percent while average weekly hours contracted from 33.9 to 33.8 while manufacturing continued lose jobs which is hardly surprising given the recent data in the sector. On balance, this report does little to shift the Fed's game plan to continue pausing. These days traders question the validity of every good number, which is why the reaction in the market has been tepid. So far nothing in this report appears to take us out of the 1.2750-1.2925 trading range that we have been trapped in since the beginning of the month. Given the holiday shortened trading, volatility is likely to decrease as London winds to a close.
