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Fed focus shifts toward employment as US labor data weakens

ABN AMRO expects the Fed to stay on hold, but notes inflation risks remain skewed toward a possible hike.

Reported · Written up by our desk · Central Banks

ABN AMRO Chief Economist Nick Kounis says the Federal Reserve’s focus may be re-balancing toward employment as recent US labor market signals soften.

According to FXStreet, Kounis points to falling Nonfarm Payrolls and weaker household employment data, arguing that the unemployment rate’s decline came alongside a drop in labor force participation to multi-decade lows, a setup he views as consistent with cyclical weakness.

Kounis suggests this renewed labor-market weakness could shift the Fed’s concerns toward jobs, even as ABN AMRO still expects policymakers to remain on hold.

FXStreet adds that the broader dollar reaction reflects investors reassessing disappointing US NFP figures from July, with GBP/USD holding below 1.3500 and EUR/USD moving back toward the 1.1560 area.

Latest closeEUR/USD 1.152 ▼0.3%|GBP/USD 1.345 ▼0.1%

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