Multiple economic data point to a slowdown in US non-farm payrolls in July!

Deutsche Bank anticipates a weakening US dollar index due to economic indicators suggesting a slowdown in US non-farm payrolls for July. On August 2nd, the dollar index fell by 0.21% to 103.89, reflecting market anticipations ahead of the release of July's non-farm payrolls data, which is expected to show a moderation in job growth.

Market watchers predict an increase of 175,000 non-farm payroll jobs for the month, a decrease from the previous month's 206,000, with the unemployment rate expected to hold steady at 4.1%. This expectation follows Federal Reserve Chairman Jerome Powell's recent emphasis on the labor market as a key concern for the Fed, especially after the US ISM manufacturing activity and employment data for July indicated a contraction, contributing to the dollar's weakness.

Deutsche Bank's FX analyst, Volkmar Baur, notes that the market is poised for further volatility as the anticipated slowdown in non-farm payroll growth could be a significant factor. This is further supported by the rise in US initial jobless claims to a near one-year high, reaching 249,000 for the week ending July 27th, which exceeded market expectations and the revised previous week's figure.

A slowdown in non-farm payrolls, as expected, is likely to exert additional downward pressure on the US dollar, highlighting the interplay between labor market dynamics and currency valuation.