NFP That Could Break the Market

EUR/USD

Key zone: 1.1650 - 1.1750

Buy: 1.1750 (on a strong positive foundation) ; target 1.1900-1.1950; StopLoss 1.1680

Sell: 1.1620 (on a strong break of 1.1650) ; target 1.1450; StopLoss 1.1680

Last week, U.S. economic reports came out unusually strong: September PMI showed excellent growth, weekly jobless claims were low, durable goods exceeded forecasts, and GDP (+3.8%) was revised upward due to stronger consumer spending. But if the stock market crashes (for any reason), consumer demand will collapse sharply as well.

All published data so far point to no urgent need for Fed rate cuts and confirm the view that the decline in new job creation is linked to Trump’s immigration policy.

Problem 1: Trump

Trump continues his aggression against migrants: first he raised the H-1B work visa fee to $100,000 (up from $215), then announced restrictions on issuing commercial driver’s licenses to non-U.S. citizens. Such policies will significantly reduce new jobs, lower housing prices, but also boost wages. Strong wage growth is the Fed’s worst nightmare.

Fed officials have not yet denied the need for further rate cuts. Powell stated that cuts are tied to risks in the labor market, as inflation is expected to remain above the Fed’s target through 2026 due to trade tariffs.

Problem 2: Quality of NFP Data

The main argument is how many new monthly jobs are needed to keep the labor market balanced. Evaluating NFP quality is complicated by Trump’s immigration policy.

There is no consensus: Powell says job growth of 29K per month is below breakeven; Barkin claims the level is between 0–50K; others risk putting it at 50K–70K.

It can be assumed that job growth above 70K will reduce the Fed’s appetite for an October rate cut, and growth above 125K will nullify it completely, though September inflation data will also matter.

In any case, the unemployment rate deserves attention: holding steady at 4.3% or dropping lower would confirm the Fed’s view of the negative impact of Trump’s immigration policy.

Problem 3: Shutdown

By Wednesday, the U.S. must resolve its budget funding issues.

Another shutdown could force thousands of federal employees into furlough, creating chaos in labor market data. BLS has already warned that the October 3 report may not be published if a shutdown occurs.

Trump’s refusal to negotiate with Democrats and his warning that mass layoffs would be “on their conscience” raise the chances of temporary funding being approved until October 1.

So we act wisely and avoid unnecessary risks.

Profits to y’all!