LIVE MARKETS-Jobs data likely holds the key to Fed's July rate cut door

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JOBS DATA LIKELY HOLDS THE KEY TO FED'S JULY RATE CUT DOOR

U.S. President Donald Trump is pushing the Fed to cut rates, pointing to tame inflation, but with only two policymakers backing a rate cut for July, the central bank remains largely unmoved.

However, market focus this week is squarely on the June U.S. employment report, which could shift expectations for a rate cut as soon as July.

A Reuters poll forecasts non-farm payrolls to rise by a softer 110,000 in June, down from May's 139,000, with the jobless rate edging up to 4.3%.

The figures, due Thursday morning, are likely to reflect economic uncertainty stemming from tariff-related pressures and sweeping public-sector job cuts under the Trump administration.

Citigroup and TD Securities have flagged that an unemployment rate print of 4.5% or higher this week would significantly increase the likelihood of a July move.

"The labor market will have to create some urgency to act. Officials might be particularly sensitive to the labor market after holding rates at last year's July FOMC meeting, only to have to turn around and cut rates 50bp in September as the unemployment rate rose more rapidly than expected", analysts at Citigroup said in a note.

Yet, most Wall Street brokerages, including Goldman Sachs, Citigroup, and Wells Fargo, expect the Fed to start easing policy in September.

With policymakers still divided and inflation running tame, a decisive uptick in the jobless rate could be the spark that shifts the Fed's July calculus. Either way, this week's labor data is shaping up to be a make-or-break moment for rate cut hopes.

(Joel Jose)

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