TMGM Daily Market Breakfast: 5 September 2026

Morning Snapshot

• U.S. August nonfarm payrolls rose by 162,000, far above forecasts near 56,000, while the unemployment rate held at 4.1% and the prior two months were revised up by a combined 55,000.
• Stronger U.S. jobs data lifted September Federal Reserve hike pricing, with market-implied odds cited between about 60% and 63% after the release.
• Cleveland Fed President Beth Hammack said policy is not restrictive enough and argued that inflation remains too high, adding to the hawkish tone around the Fed outlook.
• President Donald Trump called for sharply lower U.S. interest rates despite the strong jobs report and said he could curb trade with countries running surpluses with the United States.
• Eurozone inflation remained a central focus ahead of the ECB’s 10 September meeting, with headline inflation reported at 3.3% in August and several institutions expecting a 25 basis-point rate increase to 2.50%.
• Bank of England Governor Andrew Bailey said policymakers have some discretion over how quickly inflation is returned to target while warning about pressure in bond markets.
• The Bank of Canada kept its policy rate unchanged at 2.25% for a seventh straight meeting but adopted a more hawkish tone as energy prices and trade tensions added to inflation risks.
• Canada’s economy lost 41,700 jobs in August against expectations for a 15,000 increase, while the unemployment rate held at 6.4%.
• WTI crude traded below $89 a barrel even as tensions around the Strait of Hormuz and the broader U.S.-Iran conflict kept supply risks in focus.
• The U.S. dollar strengthened after the payrolls release, while gold fell and major currency pairs including EUR/USD and GBP/USD came under pressure.

Market Developments

Foreign Exchange

The U.S. Dollar Index rose about 0.17% after the payrolls report to trade near 99.17, after touching an intraday high of 99.39. EUR/USD fell roughly 0.18% to around 1.1605, GBP/USD traded near 1.3512 after dropping to 1.3482 immediately after the data, USD/CHF was up nearly 0.34% around 0.8102, and USD/CAD rose 0.39% to about 1.3850.

Commodities and Digital Assets

Gold fell about 0.80% on Friday after losing more than 2% following the U.S. jobs report, while spot prices were described as testing the $4,400 area after reaching $4,511 on Thursday. WTI crude declined 1.21% to around $88.55-$88.65 per barrel, and Bitcoin slipped back below $80,000 to about $79,450 after an earlier rejection near $81,500.

Equities

The Dow Jones Industrial Average was indicated about 325 points, or 0.6%, lower near 53,400 after the payrolls release. Earlier in the session, Dow futures were down 0.06% near 53,710, while S&P 500 futures were up 0.06% near 7,760 and Nasdaq 100 futures were up 0.38% around 29,640.

Macroeconomics & Central Banks

U.S. Payrolls Beat Forecasts and Lift September Fed Hike Pricing

The U.S. economy added 162,000 jobs in August, sharply above forecasts clustered around 55,000 to 58,000. 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%.

Revisions strengthened the report further. July payrolls were revised from a previously reported decline of 23,000 to a gain of 21,000, while June was revised up to 31,000 from 20,000, leaving combined gains for the two months 55,000 higher than previously reported.

The stronger labour-market reading pushed up market pricing for a September Federal Reserve rate increase. Articles in the reporting window cited implied odds of roughly 60% to 63% for a 25 basis-point move, up from levels around 49% to 54% a day earlier. Attention now turns to next week’s U.S. inflation data ahead of the Federal Open Market Committee meeting on 15-16 September.

Fed Officials Keep Focus on Inflation as Policy Debate Tightens

Federal Reserve officials and market participants continued to frame the September decision as highly data-dependent, with inflation now the main focus after the stronger jobs report. Fed Governor Christopher Waller said he would be inclined to support leaving rates unchanged if August inflation shows continued progress, but would consider a hike if inflation comes in hot.

Cleveland Fed President Beth Hammack struck a more hawkish tone, saying policy is not restrictive enough and that inflation remains too high. She added that local contacts suggest now is the time for the Fed to hike to control inflation.

The policy debate is unfolding against a backdrop of stronger services activity and renewed concern about energy-driven price pressure. One report cited the ISM services index rising to 55.4 in August from 54.1, while another noted expectations for a 0.4% monthly increase in headline CPI because of higher gasoline prices.

Trump Presses Fed for Lower Rates After Strong Jobs Data

President Donald Trump renewed pressure on the Federal Reserve after the August employment report, arguing that the United States should have some of the lowest borrowing costs in the world despite stronger-than-expected job creation.

In a Truth Social post, Trump welcomed the 162,000 payroll gain as well above expectations but still called for sharply lower interest rates. He also linked monetary policy to trade policy, saying he would stop trading with countries that run surpluses with the United States, presenting the approach as an alternative to tariffs.

The intervention adds to political pressure on the central bank as markets reassess the path of U.S. rates ahead of next week’s inflation data and the mid-September Fed meeting.

ECB Rate-Hike Expectations Hold Firm Ahead of 10 September Meeting

Eurozone inflation and the European Central Bank’s next move remained central themes, with several institutions expecting the ECB to raise its deposit rate by 25 basis points to 2.50% at its 10 September meeting.

One report said eurozone headline inflation rose to 3.3% year on year in August from 2.9%, driven primarily by a 14.3% increase in the energy component. Another said recent headline readings had come in slightly weaker than the ECB’s June projections because of soft food prices, but still pointed to inflation remaining above the ECB’s target at least until spring 2027, while core inflation was seen staying above 2% through the end of 2028.

Several reports also highlighted uncertainty over the path beyond September. Markets were described as pricing a more adverse rate path, including around an 85% probability of another hike before year-end and a terminal rate near 3.00%, while analysts said President Christine Lagarde may avoid stronger pre-commitment even as oil prices and geopolitical tensions keep upside inflation risks in focus.

Bank of England Signals Flexibility While Stressing Inflation Goal

Bank of England Governor Andrew Bailey said policymakers have some discretion over how quickly they bring inflation back to target, while stressing that returning inflation to target remains imperative. His remarks tempered some of the more hawkish expectations that had supported sterling earlier in the session.

The reporting window also captured broader concern about bond-market pressure and the BoE’s need to preserve flexibility in its policy response. Separate market coverage noted that earlier hawkish rhetoric from BoE officials had supported the pound, but Bailey’s comments helped pull GBP/USD back from session highs near 1.3550 toward the 1.3520 area.

Bank of Canada Holds at 2.25% as Inflation Risks Keep Tone Hawkish

The Bank of Canada left its policy rate unchanged at 2.25% for a seventh consecutive meeting, but its communication turned more hawkish as officials flagged rising inflation risks from higher energy prices and renewed trade tensions with the United States.

Governor Tiff Macklem said inflation remained too high and that upside risks had increased because of the Middle East conflict and the renewed escalation of the trade dispute with the U.S. Officials warned that higher energy prices could increasingly spill over into other goods and services.

The policy backdrop was quickly tested by fresh labour-market data. Canada lost 41,700 jobs in August after adding 75,100 in July, missing expectations for a 15,000 increase, while the unemployment rate held at 6.4% and annual average hourly wage growth slowed to 2% from 3%.

Geopolitics, Energy & Commodities

Hormuz Tensions Keep Oil Supply Risks in Focus as WTI Slips Below $89

Oil markets remained focused on the risk that renewed U.S.-Iran tensions could disrupt flows through the Strait of Hormuz, even as prices eased during the session. WTI crude was reported down 1.21% on Friday, trading around $88.55 to $88.65 per barrel and struggling to hold above the $90 mark.

The broader geopolitical backdrop continued to shape inflation and central-bank discussions well beyond energy markets. Several reports tied higher oil prices to renewed concern about headline inflation in the United States, Canada and the euro area, with some analysts explicitly citing the conflict and Brent prices around $95 per barrel as a factor behind expectations for further ECB tightening.

Gold and Bitcoin Retreat as Strong U.S. Data Boost Dollar and Rate Bets

Gold and Bitcoin both moved lower after the stronger U.S. payrolls report reinforced expectations that the Federal Reserve could tighten policy again this month. Gold fell about 0.80% on Friday after losses of more than 2% following the data, with prices described as testing the $4,400 area after reaching $4,511 on Thursday.

Bitcoin also gave back ground, slipping below $80,000 to around $79,450 after an earlier rejection near $81,500. The move came as markets raised the implied probability of a Fed hike to around 60%, reducing support for assets that had benefited from softer-rate expectations earlier in the week.

Upcoming Key Events

• European Central Bank Policy Meeting — null: The ECB is scheduled to meet on 10 September, with multiple reports in the reporting window citing expectations for a 25 basis-point increase in the deposit rate to 2.50%.
• U.S. August CPI Release — Next Friday: August consumer price data is the key release ahead of the 15-16 September Federal Reserve meeting, with several reports describing it as central to the rate decision.
• Federal Reserve Policy Meeting — 15-16 September: The Federal Open Market Committee is due to meet on 15-16 September, with the stronger August payrolls report and next week’s inflation data shaping expectations for the decision.