EVENTS TO WATCH TODAY: 4 Sept 2020
1) U.S. Nonfarm Payrolls:
The consensus is for the US economy to have added another 1.4 million jobs in August, which would push the unemployment rate down to 9.8%, from 10.2% previously.
That would still leave the unemployment rate just beneath its peak from the 2008 financial crisis, so even though this is a step in the right direction, there are still miles to go before the labour market truly recovers.
More importantly, this report will capture the mid-July to mid-August period, when infections were on the rise and several states rolled back their reopening plans, causing high-frequency indicators to lose steam.
Crucial unemployment benefits also expired at the end of July, cutting off a vital economic lifeline for many US households, so it will be interesting to see whether all this impacted employment.
All told, the risks surrounding the dollar and stocks from this data set seem asymmetric, with a potential disappointment generating a bigger negative reaction than the corresponding upside one in case of stronger numbers.
2) US Equities:
The key driver today will be how the US equity market performs. If the sell-off accelerates, the policymakers are likely to start getting jittery and try to soothe the market.
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