Nonfarm Payroll Preview: Employment Data May Set the Tone for a September Rate Hike

1. The market expects 58,000 new non-farm payroll jobs in August, the unemployment rate to remain at 4.1%, and hourly wages to slow year-on-year to 3.0%. The report may be influenced by one-off factors—over 300,000 Haitians losing temporary protected status, shutdowns at meat processing plants, etc., so the risk of weaker-than-expected data should not be ignored. 2. The Federal Reserve's current focus is still on inflation. As long as the unemployment rate remains around 4.1%, the job market itself will not force the Fed to loosen policy. The CPI data on September 11 may be more determinative for policy than this nonfarm report. If wage growth continues to slow, it may provide support for the dovish camp within the Fed. 3. The market-implied probability for a rate hike in September has dropped from 66% at the start of the week to around 50%, partly affected by weak ADP employment figures (private sector only added 38,000 jobs). If the nonfarm data is weak, rate hike expectations could fall further, pushing down U.S. Treasury yields, supporting stocks and bonds, putting pressure on the dollar, and potentially allowing the yen to extend its rise. 4. Gold prices rebounded nearly 2% on Thursday to above $4,480. If rate hike expectations cool, gold prices are likely to continue rising, with the 200-day moving average at $4,533 as the next key resistance level. The ISM services index rebounded more than expected, but its employment component remains weak, consistent with a “low hiring/low firing” pattern. Overall, significantly deviating data will still trigger chain reactions in the market.