Market attention is currently focused on the impact of Fitch’s downgrade on the US, as the announcement has caused fluctuations in the market. US bonds are being sold, resulting in higher yields. This has led to an increase in long-term bond yields in Japan, and the Nikkei Average experienced a temporary decline of over 800 yen. Asian stock markets, including Tokyo, are facing an overall bearish situation. If this movement spreads to European and US stock markets, there is a concern that yen-buying pressure may intensify in the forex market.
Additionally, today’s release of the US ADP Employment Report is worth noting as a precursor to Friday’s official employment data release. The previous report showed a significant unexpected increase, and market participants are now focused on whether the momentum will continue. The market expectation for this report is also around a 190,000 increase in employment, but its accuracy is uncertain. Investors will closely monitor the market’s reaction to the result after its release.
Regarding the September FOMC (Federal Open Market Committee) meeting, the prevailing view in the market is for the Fed to maintain its current stance. The latest CME FedWatch data indicates that the probability of the Fed keeping rates unchanged is around 85%, while the probability of a 25 basis points rate hike is around 15%. The ADP Employment Report’s result will be a key factor in potentially changing these probabilities.
Recent ADP Employment Reports have often shown numbers that deviate from expectations, making them difficult to rely on for predictions. However, the market will be closely watching how the USD reacts to the report’s outcome.