Weekly Market Analysis: What’s Moving the Markets This Week (7–11 September)

The Federal Reserve has not been this publicly divided in years. Fed Chair Kevin Warsh delivered a hawkish Jackson Hole address on 28 August signalling that rates may need to rise. Fed Governor Christopher Waller countered on Wednesday 3 September by stating he would favour holding rates steady in September if August inflation showed continued progress. The Dollar fell to its lowest level since May on Thursday. September hike probability dropped from 63.2% to 50.2% in a single session.

Two data releases this week will determine which view prevails at the September 15-16 FOMC meeting. The August NFP lands today at 12:30 PM GMT. The August CPI lands on Thursday 11 September at 12:30 PM GMT. Both prints arrive before the committee meets.

Here is the complete picture heading into the most consequential week of the quarter.

What Happened Last Week

Warsh vs Waller: the Fed’s internal debate goes public

The week began with September hike probability sitting at 66.1% following Warsh’s Jackson Hole speech. By Thursday afternoon, it had fallen to 50.2%.

The catalyst was Fed Governor Christopher Waller’s remarks released ahead of a Reuters event on Wednesday 3 September. Waller said he was leaning toward keeping rates steady at the September meeting if the next batch of inflation data showed price pressures continuing to moderate. He cited the three-month increase in core PCE falling to 3.05% in July from 4.76% in February as “considerable improvement.” He said the effects of higher tariffs have already been substantially reflected in consumer prices and that elevated energy costs from the Middle East conflict have not broadly lifted prices across other categories. He described underlying inflation as moderating.

Waller’s remarks stood in direct contrast to Warsh’s Jackson Hole stance. Warsh said on 28 August that recent soft inflation readings “do not tell me that underlying trends have meaningfully improved.” The contrast between the two most closely watched Fed voices created an immediate market reaction. The Dollar Index fell to its lowest level since May. Bond yields retreated as traders reduced September hike positioning. Gold rose 2.1% to $4,472 per ounce. Bitcoin added 2%.

Market-implied odds of a September rate hike fell from 63.2% on Wednesday to 50.2% on Thursday per CME FedWatch, before settling at approximately 54.6% by Thursday close per 24/7 Wall Street citing CME Group data. As of this morning, the August NFP data, which lands at 12:30 PM GMT today, is the next variable that will move that number in either direction.

Benchmark revision quietly lowered the baseline

On 28 August, the BLS published its preliminary annual benchmark revision for the 12 months through March 2026. Total nonfarm employment over that period was overstated by 79,000 jobs, a downward adjustment of 0.1%. Private payrolls were revised down 178,000, with the largest cuts in retail trade (-155,000), private education and health services (-96,000), and financial activities (-76,000). Government jobs were revised up approximately 99,000 to offset. The revision is smaller than feared. Last year’s preliminary was -898,000. It quietly lowers the baseline against which August’s number will be read.

This Week’s Events

Today, 4 September — August NFP and Unemployment Rate (USD) | 12:30 PM GMT

The BLS releases the August Employment Situation report at 8:30 AM ET today. This is the final labour market reading the FOMC will receive before its September 15-16 decision.

Consensus forecast per FinancialJuice and TOPONE Markets: NFP +55,000, unemployment rate holding at 4.1%, average hourly earnings slowing to 3.0% year-on-year from 3.2% in July. The forecast range is wide at -25,000 to +102,000, reflecting genuine uncertainty following two consecutive months of very weak data. July printed -23,000. June was revised down to +20,000. The combined May-June revision subtracted 103,000 jobs from previously reported figures.

Several cross-market signals point toward a better-than-expected print. Weekly initial jobless claims on a four-week moving average fell to 198,750 in the week ending August 1, down 4,500 from the prior week. NFP leading indicators tracked by Investing.com point to a potentially above-consensus reading. ADP’s July private sector estimate came in firmer than expected.

However, Waller’s comments explicitly conditioned his hold preference on August inflation data, not August labour data. A strong NFP alone may not move Waller toward the hawkish camp if he sees the recent three-month inflation trend as sufficient evidence of progress.

What traders are watching:

Strong rebound above 100,000 — Bullish USD. Validates the case for a September hike. September hike probability likely moves above 65%. Dollar strengthens and risk-off tone returns.

Weak print or negative — Bearish USD. Confirms the labour market deterioration trend. September hold becomes the base case. Dollar weakens and risk assets extend Thursday’s gains.

Thursday, 11 September — US Consumer Price Index (USD) | 12:30 PM GMT

This is the defining event of the week and the final major inflation data point before the September 15-16 FOMC decision. The BLS releases the August CPI at 8:30 AM ET on Thursday.

July CPI came in at 3.4% year-on-year, unchanged from the prior reading, and 0.1% month-on-month on a seasonally adjusted basis. Core CPI was 0.2% month-on-month and 2.5% year-on-year in July. The BLS homepage confirms that from July 2025 to July 2026, real average hourly earnings decreased 0.2%, meaning inflation is still outpacing wage growth.

For August, the Finance Calendar editorial note, published in June, projects inflation remaining elevated above the Fed’s 2% target. Yahoo Finance’s Nowcasting model projects core CPI monthly growth of approximately 0.2%, representing a modest reacceleration from July’s reading. Waller has explicitly drawn the line: if August inflation shows continued progress, he favours a hold. If the numbers surprise to the upside, Warsh’s more aggressive posture carries the day.

The release lands five days before the FOMC decision. There is no August PCE before the meeting. CPI on Thursday is the last inflation data the committee sees before voting.

What traders are watching:

Higher than expected — Bullish USD. Reacceleration in core or headline CPI shifts the balance toward the Warsh camp. September hike probability climbs back toward 65%+. Dollar strengthens.

In line or lower — Bearish USD. Confirms Waller’s view that disinflation is continuing. September hold becomes the clear majority view. Dollar weakens and the rate differential story shifts further against USD.

The September 16 Picture

Going into this week, the September 16 FOMC decision is genuinely split. Waller’s remarks on Wednesday gave the dovish camp its clearest internal voice since the July meeting. But Waller was also careful. His “if” is conditional on August inflation cooperating. He said explicitly that if the numbers surprise to the upside, tightening further remains on the table.

That leaves Thursday’s CPI as the data point that resolves the internal Fed debate publicly before the committee meets. The sequence matters: NFP today shapes the labour market half of the dual mandate picture. CPI on Thursday shapes the inflation half. The FOMC then votes on September 16 with both readings in hand.

Deutsche Bank noted after Warsh’s Jackson Hole speech that the address “surprised in its specificity about the economy and outlook and with its lean in a decidedly hawkish direction.” Citigroup economist Andrew Hollenhorst characterised Warsh’s comments as “relatively uncontroversial and restated each time he has spoken,” but acknowledged the market read them as more hawkish than usual. That tension between chair and governor is the defining story of monetary policy heading into autumn.

Calendar Snapshot

Date	Event	Currency	Time (GMT)
Thu 4 Sep	Non-Farm Payrolls	USD	12:30 PM
Thu 4 Sep	Unemployment Rate	USD	12:30 PM
Thu 4 Sep	Average Hourly Earnings	USD	12:30 PM
Thu 11 Sep	Consumer Price Index	USD	12:30 PM

A Quick Note on Risk

Economic data releases can cause sharp, fast market moves. This week carries two distinct high-risk windows: today at 12:30 PM GMT when NFP lands, and Thursday, 11 September, at 12:30 PM GMT when August CPI prints. With the September 16 FOMC meeting nine days away, any significant surprise in either direction is likely to generate an outsized market reaction across USD pairs, bonds, and equities. Make sure you understand how your FXIFY account drawdown rules work before you trade around major news events. For more on how funded traders approach volatile sessions, see our guides on trading styles for funded traders and how news events affect prop traders.