TMGM Daily Market Breakfast: 5 September 2026

Morning Snapshot

• U.S. August nonfarm payrolls rose by 162,000, far above forecasts of about 56,000, while the unemployment rate held at 4.1% and average hourly earnings growth eased to 3.1%.
• The stronger U.S. jobs report lifted market-implied odds of a September Federal Reserve rate increase, with cited pricing rising to roughly 60%-63% after the data.
• Canada’s economy shed 41,700 jobs in August against expectations for a 15,000 increase, while the unemployment rate held at 6.4% and annual wage growth slowed to 2%.
• Cleveland Fed President Beth Hammack said current U.S. monetary policy is not restrictive enough and that inflation remains too high.
• President Donald Trump called for sharply lower U.S. interest rates despite the strong jobs report and said he would curb trade with countries running surpluses with the United States.
• Eurozone inflation remained a central focus ahead of next week’s ECB meeting, with August headline inflation reported at 3.3% and several institutions expecting a 25 basis-point rate increase to 2.50%.
• Analysts said the ECB’s post-September path remains uncertain, with some expecting an extended pause after a hike while others highlighted upside risks if energy prices stay elevated.
• WTI crude traded below $89 a barrel, with prices still shaped by persistent tensions around the Strait of Hormuz and broader Middle East supply risks.
• The U.S. dollar strengthened after the payrolls report, while gold fell, Bitcoin slipped back below $80,000 and major currency pairs including EUR/USD and GBP/USD retreated against the greenback.

Market Developments

Foreign Exchange

The U.S. dollar strengthened after the August payrolls report. The Dollar Index rose about 0.17% to around 99.17 after touching 99.39, EUR/USD traded near 1.1605 down roughly 0.18%, GBP/USD recovered from an intraday low of 1.3482 to trade around 1.3512, USD/CHF traded around 0.8102 up nearly 0.34%, and USD/CAD rose about 0.39% to around 1.3850.

Commodities & Cryptocurrencies

Gold fell after the U.S. jobs data, with one report citing a decline of about 0.80% on Friday after losses of more than 2% following the release, while another placed spot gold near $4,400 after a Thursday high of $4,511. Bitcoin also retreated, slipping back below $80,000 and trading around $79,450 after earlier nearing $81,500. WTI crude traded around $88.55 per barrel, down 1.21% on the day.

U.S. Equities

The Dow Jones Industrial Average traded just short of 53,400, down roughly 325 points or 0.6%, after the stronger-than-expected payrolls report increased expectations of a September Fed rate hike.

Macroeconomics & Central Banks

U.S. Payrolls Beat Forecasts as September Fed Hike Odds Rise

U.S. nonfarm payrolls increased by 162,000 in August, well above forecasts of about 55,000 to 56,000. July payrolls were revised up to a gain of 21,000 from a previously reported decline of 23,000, while June was revised to 31,000 from 20,000, leaving combined revisions 55,000 higher than previously reported.

The unemployment rate held at 4.1%, labour-force participation rose to 61.6% from 61.4%, and annual average hourly earnings growth eased to 3.1% from 3.2%. Several reports described the figures as evidence of a more resilient labour market, even as wage growth moderated.

The stronger report pushed up market-implied odds of a September Federal Reserve rate increase. Cited pricing ranged from about 60% to 63% after the release, up from roughly 49% to 54% a day earlier, while one report said markets moved to price 16 basis points of a 25 basis-point hike, up from 12.5 basis points previously. Attention now turns to next week’s U.S. inflation data ahead of the September 15-16 FOMC meeting.

Fed Officials and Analysts Signal Tight Policy Debate Is Still Open

Cleveland Fed President Beth Hammack said current monetary policy is not restrictive enough and that inflation remains too high, adding that local business contacts indicate now is the time for the Federal Reserve to raise rates to control inflation.

The policy debate remains finely balanced ahead of the next FOMC decision. One report cited Fed Governor Christopher Waller as saying the Fed is in no rush to raise rates if inflation cools, while another noted that officials remain concerned that inflation, after staying too high for too long, could become more embedded in wage and price setting.

Analyst commentary in the reporting window broadly described the September decision as a close call. Some still expect no change in rates, but several said the stronger jobs report materially increased the risk of a 25 basis-point move, leaving next week’s inflation data as the key scheduled input before the meeting.

Canada Loses 41,700 Jobs in August as Wage Growth Slows

Canada’s economy lost 41,700 jobs in August after adding 75,100 in July, sharply missing expectations for a further 15,000 increase. The unemployment rate held at 6.4%, in line with expectations.

Annual average hourly wage growth slowed to 2% from 3% in the previous month. The weak Canadian labour report was released alongside the much stronger U.S. payrolls data, reinforcing a sharp move in USD/CAD, which rose nearly 80 pips and traded around 1.3850, up about 0.39% on the day.

ECB Seen Heading for September Hike as Inflation Stays Above Target

Eurozone inflation and the ECB’s next move remained central themes ahead of the 10 September policy meeting. One report cited August headline inflation at 3.3% year on year, up from 2.9%, driven primarily by a 14.3% increase in the energy component.

Across the reporting window, several institutions said the ECB is likely to raise its deposit rate by 25 basis points to 2.50% next week. Analysts said the recent rise in energy prices has strengthened the case for another increase, while the euro area’s inflation-growth mix has been seen as resilient enough to absorb further tightening.

The policy path after September is less settled. Some expect the ECB to hold at 2.50% for an extended period, while others said risks remain skewed toward further hikes if inflation broadens into wages, services and expectations or if oil prices stay elevated. Another report said headline inflation is likely to remain above the ECB’s target at least until spring 2027, with core inflation projected to stay above 2% through the end of 2028.

Government Policy & Geopolitics

Trump Renews Pressure on Fed and Links Rate Demands to Trade Policy

President Donald Trump welcomed the creation of 162,000 U.S. jobs in August but renewed calls for sharply lower interest rates, arguing that the United States’ financial strength should translate into some of the lowest borrowing costs in the world.

In a Truth Social post, Trump also tied his rate demands to trade policy, saying he would stop trading with countries that run surpluses with the United States. He presented that approach as an alternative to tariffs and called on the Fed Board, which he described as having a “great new leader,” to lower borrowing costs.

The comments added political pressure to the central bank just as markets reassessed the policy outlook after the stronger-than-expected jobs report.

Energy & Commodities

Oil Holds Middle East Risk Premium Even as WTI Slips Below $89

WTI crude traded around $88.55 per barrel, down 1.21% on the day, but oil markets remained shaped by persistent tensions around the Strait of Hormuz and the broader escalation in the Persian Gulf.

The reporting window also linked elevated oil prices to central-bank concerns, particularly in Europe, where analysts said Brent near $95 per barrel and the risk of further increases have complicated the inflation outlook ahead of the ECB meeting. Some institutions said a prolonged period of oil prices in the $80-$100 range could keep pressure on policymakers, while prices above $100 could intensify that challenge further.

Gold and Bitcoin Retreat as Strong U.S. Jobs Data Lift Rate Expectations

Gold fell after the U.S. payrolls report strengthened expectations of further Federal Reserve tightening. One report said bullion was down about 0.80% on Friday after losses of more than 2% following the data, while another placed spot gold near $4,400 after it had reached $4,511 on Thursday.

Bitcoin also gave back ground after the employment release. The cryptocurrency slipped back below $80,000 and traded around $79,450 after an earlier rejection near $81,500, as markets repriced the U.S. interest-rate outlook.

Upcoming Key Events

• European Central Bank Policy Meeting — 2026-09-10: The ECB is scheduled to meet on 10 September, with multiple reports in the reporting window focused on the possibility of a 25 basis-point increase in the deposit rate to 2.50% and on guidance for the path after September.
• U.S. August CPI Release — Next Friday: Next week’s U.S. consumer inflation report was repeatedly identified as the key data release before the September 15-16 FOMC meeting, with several reports saying it will be central to the Fed’s rate decision.
• Federal Reserve FOMC Meeting — 2026-09-15 to 2026-09-16: The Federal Open Market Committee is scheduled to meet on 15-16 September, with the stronger August payrolls report increasing attention on whether officials will keep rates unchanged or deliver a 25 basis-point increase.