Awaiting U.S. Jobs Data and Deal to Reopen Hormuz
August 7, 2026
The dollar marked time overnight, with no net changes against the euro, loonie or its weighted DXY index, an uptick of 0.1% relative to sterling, and downticks of 0.1% versus the Australian dollar and Japanese yen. Bigger drops of 0.3% occurred against the Mexican peso, Indonesia rupiah and Swiss franc and of 0.5% relative to the South Korean won.
An interim accord among Iran, Oman and the U.S. is claimed to be very near, but details appear to be more restrictive to shipping than the U.S. had been seeking. Even as talks moved closer to a deal, moreover, fighting in the region continues to escalate, presenting a murky picture regarding how “normal” the conflicts next stage is likely to be. At $76.64 per barrel, West Texas Intermediate crude oil’s price is 0.8% lower than Thursday’s close but 39% above its 52-week low touched last December.
Investors seek guidance on whether the federal funds rate might be raised at next month’s FOMC meeting. While the key determinant is likely to be found in upcoming U.S. price data, today’s July report on the employment situation may also have a highly influential effect. The consensus in the street anticipates a slightly bigger employment rise than June’s preliminary estimate of 57k but a figure again south of 100k, along with unchanged rates of unemployment of (4.2%) and wage growth (3.5%). Leading labor market indications have been quite mixed, lending a high degree of uncertainty surrounding today’s report.
In stock market action overnight, major market closures in the Pac Rim ranged a drop of 1.0% in New Zealand to gains of around 1% in China, Indonesia and Singapore. The German Dax and Paris CAC have each risen more than 0.5% so far. The Nasdaq is is presently 0.5% higher, but the D-Jones and S&P 500 show only marginal net advances.
While the ten-year U.S. Treasury yield has shed two basis points, there have been rises in comparable sovereign debt yields of 9 bps in Australia, 3 bps in Switzerland and 2 bps in Japan.
Precious metals and crypto have been well-bid with gains of 5% in silver and about 2% in gold and Bitcoin.
Data highlights from other countries today include a trio of Japanese releases. Household spending in June was considerable weaker than forecast, dropping by 6.4% versus May and 3.3% compared to June of 2025. Forex intervention by the Bank of Japan during the second quarter totaled $73.3 billion in defense of the yen. Finally, the leading and coincident indices of Japanese economic indicators rose to 58- and 36-month highs in June.
China’s trade surplus in July of $112.5 billion exceeded market expectations, bringing the year-to-date total to a robust $687 billion. July exports and imports both increased more than 20% between July 2025 and last month.
Germany’s trade surplus in June of EUR 15.4 billion seasonally adjusted was smaller than May’s figure but in line with the second-quarter monthly average of 15.5 billion euros. Unadjusted exports and imports were respectively 18.9% and 14.0% above July 2025 levels.
France posted current account deficits of EUR 1.4 billion in June and EUR 6.5 billion in the first half of 2026. The French trade deficit in the first half of this year totaled about EUR 34 billion.
Although at a 5-month high, Swiss consumer confidence last month was still quite pessimistic with a reading of -35.
Greek consumer price inflation receded to a 5-month low of 3.4% in July but was still almost double last September’s 1.9% reading.
Consumer price inflation slowed in July to a 68-month low of 2.2% in Estonia and a 116-month low of 1.2% in Hungary.
In Euroland’s largest economy, Germany, industrial production remained very subdued in June, edging up 0.2% on month and dipping 0.1% compared to the year-earlier level. However, output strengthened 0.7% in the second quarter after a 1.2% drop in 1Q.
Although U.S. labor market statistics in July were weaker than anticipated, the FOMC’s recent characterization that “job gains have kept pace with the workforce” remained more or less accurate. Unemployment fell to 4.1% from 4.2% in June and 4.3% in May, and the combined un- and under-employment rate held steady at 7.9%. This was possible because labor market participation continued falling, reaching 61.4% versus 61.8% just two months earlier. However, the attention-getting elements of the report were a 23k drop in employment last month versus expectations of +80k and a combined downward 103k revision of the May and June jobs numbers. Altogether, the level of employment last month was a little more than 200k lower than what analysts were expecting. Put differently, while the first and second quarters had similar monthly average jobs growth of about 75k, July’s 5-month low -23k figure was even worse than the average monthly pace last year.
In the final 12 months of President Trump’s first term, non-farm payroll jobs crashed 6.0%. In the first 18 months of his second term, jobs grew 590k or 0.25% at an annualized rate. Combining those two stints into one 2-1/2 year presidential period yields an annualized employment drop of 2.3%. In between, the four years of Biden stewardship produced positive employment growth of 2.5% at an annualized rate. Trump also had an initial three years of non-pandemic rule from January 2017 to January 2020, but even then U.S. employment growth of 1.4% per annum was sub-standard.
Even though a number of Fed officials since last month’s FOMC meeting had made hawkish comments seemingly putting a September interest rate hike in play, today’s U.S. jobs market, assuming all other influences being unchanged, enhances the odds of further delay in taking such an action. Upcoming U.S. price data and anything bearing on the state of expected future inflation now becomes critically important because price stability for the time being is being prioritized over the Fed’s other policy mandate of maximized employment. Financial markets in the wake of the U.S. release but before the opening bell reacted as one might expect, with stock futures now showing clear advances and the 10-year Treasury yield now six basis points lower on the day.
What a difference a border makes. South of the 49th parallel in North America as noted above, employment fell by 23k nationwide in July, well below market expectations. But in the much less populated Commonwealth of Canada, a net 75.1k of jobs were created, far more than anticipated. Scaling up that figure to the size of U.S. employment, which is roughly 7.5 times higher than inCanada, translates to a 565 thousand monthly rise in jobs. The unemployment rate slowed to 6.4%, and average weekly earnings on-year growth fell to 3.0%.
Mexico’s overnight interbank rate was left unchanged at 6.5% after the August policy review. Two 25-basis point cuts were done to that level during the first half of 2026. While inflation is projected to decline throughout the forecast period, “the balance of risks for the trajectory of inflation remains biased to the upside. The changes in economic policy by the US administration and a possible extension of geopolitical conflicts continue adding uncertainty to the forecasts.”
Copyright 2026, Larry Greenberg. All rights reserved.
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