On September 5th, data released by Automatic Data Processing (ADP) on Thursday showed that the U.S. August "small non-farm" data fell short of expectations, once again indicating that the labor market is encountering resistance and reinforcing expectations for Federal Reserve rate cuts. Specifically, U.S. August ADP employment increased by 54,000, below the market consensus forecast of 65,000 and significantly slower than the previous month's revised figure of 106,000. ADP Chief Economist Nela Richardson stated that job growth momentum was strong at the beginning of the year, but this momentum has been repeatedly impacted by uncertainty. Richardson noted that declining consumer confidence, labor shortages, and disruptions related to artificial intelligence could be reasons for the slowdown in job growth. Driven by labor market concerns, traders have increased bets on a September Fed rate cut. The CME FedWatch tool shows that the probability of a September rate cut has risen to 97.4%, up from 96.6% the previous day.

Additionally, St. Louis Federal Reserve President Alberto Musalem said on Wednesday that he expects the job market to gradually cool and downplayed long-term inflation concerns. His shift in stance could open the door for U.S. rate cuts this fall. During a speech at the Peterson Institute for International Economics that day, Musalem said: "With lower hiring rates, any increase in layoffs could lead to more serious weakness in the labor market." "While I haven't heard from businesses about impending increases in layoffs, actual GDP growth slightly below potential, along with profit margin pressures related to tariffs, could lead to such outcomes," he said. Musalem appeared less concerned about inflation in his speech, saying he expects tariff impacts to work through the economy over the next two to three quarters, with "inflation effects fading thereafter."

Key data to watch today includes UK July seasonally adjusted retail sales monthly rate, Eurozone second quarter seasonally adjusted GDP quarterly rate final value, U.S. August non-farm employment change seasonally adjusted, and Canada August employment change.

**U.S. Dollar Index** The U.S. Dollar Index consolidated with volatility yesterday, closing slightly higher on the daily chart, with current price trading around 98.20. Besides short covering providing some support to the exchange rate, market caution ahead of the U.S. non-farm employment report also provided certain support. However, Fed rate cut expectations, concerns about Fed independence, and weak U.S. ADP employment data during the session limited the rebound space for the exchange rate. Today, focus on resistance around 98.70, with support below around 97.70.

**EUR/USD** The Euro consolidated with volatility yesterday, closing slightly lower on the daily chart, with current price trading around 1.1660. The U.S. Dollar Index rebounding on short covering and ahead of the non-farm report was the main reason pressuring the Euro lower. Additionally, weak Eurozone retail sales data released during the session also weighed on the exchange rate. However, existing Fed rate cut expectations limited the downside correction space. Today, focus on resistance around 1.1750, with support below around 1.1550.

**GBP/USD** The Pound consolidated with volatility yesterday, closing slightly lower on the daily chart, with current price trading around 1.3450. The U.S. Dollar Index rebounding on short covering and ahead of the non-farm report was the main reason pressuring the Pound lower. Additionally, market concerns about UK fiscal sustainability also weighed on the exchange rate. However, existing Fed rate cut expectations and cooling expectations for Bank of England rate cuts limited the downside space. Today, focus on resistance around 1.3550, with support below around 1.3350.