Risk assets rally as soft US jobs data reinforces Fed pivot expectations
Global risk sentiment improved markedly following disappointing US employment data that strengthened expectations for earlier Federal Reserve rate cuts. The weak jobs report showed the US labor market cooling faster than anticipated, with job growth slowing to 142K from the previous 206K and wage growth moderating to 3.8% year-over-year. This data shift has led markets to price in a 70% chance of a Fed rate cut by year-end, compared to just 40% a week ago. Currency markets reflected the risk-on mood, with high-beta currencies like AUD/USD gaining 0.8% to 0.6580 and NZD/USD advancing 0.6% to 0.5920. Safe-haven currencies underperformed, with USD/JPY rising 0.4% to 147.80 and USD/CHF climbing 0.3% to 0.8450. The improved sentiment could persist if upcoming US economic data continues to support the narrative of a Fed policy shift toward accommodation.
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