Dollar Loses Its Grip: Jobs Data in the Driver’s Seat.

• USD: CPI rise not enough to offset labour market weakness; markets fully pricing two Fed cuts by year-end.

• BLS Shake-Up: Potential shift from monthly to quarterly payroll data could increase downside risks for the dollar.

• EUR: ZEW surveys show poor reception to US–EU trade deal; ECB pricing edges slightly less dovish.

• EUR/USD: Bullish setup strengthened post-CPI but key breakout likely delayed until after Trump–Putin summit.

• GBP: Pound steady before Q2 GDP release; expected slowdown and softer labour market could pressure BoE policy.

USD: Bearish momentum builds after CPI miss
Yesterday’s US CPI release proved a setback for the greenback. Core inflation ticked up to 3.1% YoY and 0.33% MoM—uncomfortable, but not alarming enough to outweigh the ongoing deterioration in the labour market. Markets remain fully priced for a September Fed cut (23bp), with another 35bp by year-end. Right now, the dollar has little to fuel a rebound. While upcoming activity surveys might offer a brighter outlook, jobs data remains the deciding factor. A meaningful dollar recovery from here likely requires a clear turnaround in employment numbers.

Adding to the intrigue, new Bureau of Labor Statistics chief EJ Antoni is reportedly considering shifting from monthly to quarterly payroll reporting during a methodology review. Market reaction has been muted so far, but such a change could amplify downside risks for the dollar if implemented.

No major US data is due today. Proximity to Friday’s Trump–Putin summit and shifting odds of a ceasefire suggest the dollar’s downside may pause for now.

EUR: ZEW survey highlights trade deal disappointment
Yesterday’s ZEW surveys underscored the eurozone’s lukewarm reception to the US–EU trade deal. The “expectations” index fell to 35 in Germany and 25 across the eurozone—the weakest since May.

Markets, however, are largely shrugging this off. ECB rate expectations for December have nudged up from -15bp to -10bp. We see that pricing as too cautious, leaving the euro vulnerable longer term, but near-term moves will be dictated by the Fed story.

The bullish EUR/USD case strengthened after the US CPI print, but a decisive break higher may have to wait until after Friday’s Trump–Putin meeting.

GBP: Pound steady ahead of GDP test
Sterling traded broadly unchanged against its peers on Wednesday as investors awaited Thursday’s preliminary UK Q2 GDP figures. Economists see just 0.1% QoQ growth, down sharply from 0.7% in Q1. Annual growth is forecast at 1%, under the Bank of England’s 1.25% projection and Q1’s 1.3% pace.

A softer GDP print would add pressure on the BoE, already contending with persistent inflation. Last week, the Bank raised its one-year CPI forecast to 2.7% from 2.4%. Labour market weakness is also on the radar: vacancies fell by 44K to 718K from May to July, while July’s early payroll estimate dropped by 8,000. Survey feedback suggests firms are scaling back hiring or declining to replace departing staff.