For now, markets remain cautious. The dollar is holding firm as traders lean toward the view that the Fed may push back its anticipated 25bps rate cut, potentially delaying it by a month if the data underscores continued economic resilience. That sentiment has weighed on gold, which registered a fourth consecutive daily decline, trading just above the psychological $4,000/oz threshold. Expectations for near term rate cuts have faded, reducing bullion’s appeal at a time when investors are searching for yield.
At SARACEN MARKETS, we see a clear theme emerging: markets are in “wait and see” mode until Thursday. Rate sensitive assets are likely to remain choppy as traders recalibrate positions around the uncertain odds of a December move. A softer than expected jobs print could unlock fresh downside pressure on the dollar and revive gold demand but in the absence of clarity, nervousness is likely to persist.
This uncertainty is being amplified by diverging messages from Fed officials.
- Vice Chair Philip Jefferson has flagged downside risks to the labor market, urging a cautious and gradual approach.
- Governor Christopher Waller, meanwhile, supports a December cut, citing evidence of cooling employment conditions.
Despite these mixed signals, markets are only pricing roughly a 40% probability of a rate cut next month. The bigger issue, however, is the Fed’s concern over still sticky inflation and the limited visibility created by weeks of delayed data a combination that makes it harder to assess the economy’s true momentum.
This week’s jobs report will be the defining catalyst. Until then, FX, gold, and rates markets will likely trade in tight, sentiment-driven ranges. Consider this a critical data point before making any execution decisions the market’s next major narrative hinges on Thursday’s numbers.
Disclaimer: This report is for informational purposes only. It does not constitute investment advice or represent the official views of any central bank or regulatory body.