The highly anticipated U.S. August non-farm payrolls report will be released on Friday (September 4). The market consensus is for an increase of 56,000 jobs (the forecast range is between -25,000 and +121,000), compared to a previous reading of -23,000. Private sector employment is expected to increase by 45,000, the unemployment rate is expected to remain unchanged at 4.1%, and the year-on-year growth rate of average hourly earnings is expected to slightly decrease from 3.2% to 3.0%.

Non-Farm Payrolls Preview: Leading Indicators Weak, August Seasonally Weak

The US August non-farm payrolls report is due on Friday, with market consensus expecting an increase of 56,000 jobs (range: -25,000 to +121,000), compared to a -23,000 in July. Private sector employment is expected to increase by 45,000, the unemployment rate is expected to remain stable at 4.1%, and average hourly earnings are expected to increase by 3.0% year-on-year (previous value: +3.2%). Leading indicators are generally weak: ADP employment is expected to increase by 38,000 (lowest since January), ISM services employment by 478,000, Challenger job cuts by 53,000 (previous value: 33,000), and initial jobless claims are expected to be 206,000 (previous value: 187,000). BMO points out that August data has a seasonally weak characteristic—it is below expectations 71% of the time, averaging 71,000 lower. Due to the start of the school year, the market usually filters education-related employment data. Overall, leading indicators almost universally point to weakness. ADP private sector employment rose by only 38,000, the lowest level since January this year; the ISM services employment index fell to 47.8, remaining in contraction territory; Challenger job cuts rose to 53,000, a significant increase from the previous month; initial jobless claims rose to 206,000 in the survey week, also higher than the previous month. These signals collectively suggest that the cooling trend in the labor market may continue. BMO specifically notes that August non-farm payroll data historically has a significant seasonal weakness, falling short of market expectations about 71% of the time, with an average shortfall of 71,000. Furthermore, due to differences in school opening times in different parts of the US, education-related employment often fluctuates significantly, and the market usually actively filters this part of the data to observe underlying trends. Overall expectations are for the unemployment rate to remain stable at 4.1% and hourly wage growth to continue slowing to 3.0%, which also aligns with the narrative of a gradually cooling job market. Therefore, if this report meets or falls short of expectations, it will reinforce the market consensus that "employment is no longer overheated."

Market Impact: Weak data puts pressure on the dollar, potentially benefiting the stock market.

Weak data would further pressure the dollar, potentially benefiting the stock market; strong data could reverse risk sentiment. However, Waller himself has downplayed the importance of the jobs report: "I don't think the jobs data will deviate too much from what we've seen. My policy decisions will be primarily influenced by the August inflation data." The 4.33% yield on the 2-year Treasury note suggests the market is roughly 50/50 about a September rate hike. The market will focus on whether the non-farm payroll data will further push the probability of a September rate hike below 50%. If the non-farm payroll data significantly misses expectations, it will further solidify the Fed's pricing in a September hold-at-home order, and the dollar index is expected to continue to be under pressure, especially given Waller's dovish stance has already weakened the dollar, coupled with the suspected intervention by Japanese authorities causing a sharp drop of about 330 points in the dollar against the yen in a single day. Weak jobs data could exacerbate the dollar's decline. Conversely, risk assets are expected to benefit, and US stocks may be supported by rising expectations of a rate cut. If the data is unexpectedly strong, it could temporarily boost the probability of a rate hike, triggering a dollar rebound and a reversal in risk sentiment. It's worth noting that Waller himself has downplayed the weight of this jobs report, explicitly stating that he "doesn't think the jobs data will deviate too much from what we've seen," and emphasizing that his policy stance will primarily depend on the upcoming August inflation data. Currently, the 2-year Treasury yield is around 4.33%, corresponding to a roughly 50/50 market probability of a September rate hike. Traders will closely monitor the immediate changes in the FedWatch probability after the non-farm payrolls release to determine if it falls further below 50%. Overall, the jobs data plays more of a sentiment catalyst role; the key factor truly determining the policy path remains the subsequent inflation trend.

US Dollar Index: Non-farm payroll data will determine the "attack and defense" of the 99 level.

If non-farm payroll data significantly falls short of expectations (e.g., fewer than 30,000 new jobs), the US dollar index may fall below 99.00 and seek further support at 98.50. TD Securities points out that even if non-farm payroll data exceeds expectations, it will only be a "knee-jerk boost" for the dollar, but not enough to support an interest rate hike. Waller himself has downplayed the importance of the employment report, stating explicitly, "I don't think the employment data will deviate too much from what we've seen; my policy decisions will be primarily influenced by the August inflation data." This means that even if non-farm payroll data is strong, the dollar's rebound potential is limited—there is strong resistance above 99.80, making a breakthrough difficult. On the other hand, if the data meets expectations (50,000-80,000 new jobs), the dollar may find short-term support but is unlikely to form a trend breakout. If the data is exceptionally strong (e.g., more than 100,000 new jobs), it may reignite expectations of an interest rate hike, pushing the dollar towards the 99.80-100.00 range. (US Dollar Index Daily Chart, Source: EasyForex) At 10:52 Beijing time, the US Dollar Index was at 98.99.