That is the real USD story right now:
The market is no longer asking, “When will the Fed cut?”
It is increasingly asking:
“What if the Fed cannot cut at all?”
THE FED IS GETTING A VERY UNCOMFORTABLE SIGNAL FROM THE MARKET.
The U.S. economy just added 162K jobs in August, far above expectations, while unemployment held at 4.1%.
That alone reduces the case for cutting rates.
But now oil is approaching $100.
That changes the equation.
And this is happening just days before U.S. CPI.
The interesting part?
The Fed doesn’t need to hike simply because growth is strong.
But if inflation reaccelerates while the labour market remains resilient, the argument for keeping rates higher becomes much stronger.
The Fed weights price stability much more heavily and is far more willing to look through labor softness.
The Fed won’t pivot to a cut on a 9K ADP miss, which means it does nothing to constrain their optionality.
ADP is low-signal.