September 3rd saw the US dollar strengthen and hover near a two-week high. Ahead of a series of data releases, including the US August non-farm payroll report, the market is unable to make a clear judgment on the scale of the Federal Reserve's rate cut, hence proceeding with caution.

Specifically, the euro fell 0.16% against the US dollar to 1.1055, not far from the two-week low of 1.1042 touched in the previous trading day; the British pound fell 0.17% against the US dollar to 1.3124.

The US Dollar Index rose by 0.11% to 101.77, slightly below the two-week high of 101.79 touched on Monday. Due to strong market expectations for a US rate cut, the US Dollar Index fell by a total of 2.2% in August.

Last month, Federal Reserve Chairman Jerome Powell hinted that to ensure the US labor market, the US may soon begin to cut interest rates.

This week, investors are focusing on the non-farm data to be released on September 5th, which will announce the number of new labor force members in the US last month, as well as the salary situation for the month. Before that, the job vacancy data on Wednesday and the initial jobless claims data on Thursday will also cause ripples in the market.

According to the latest Federal Reserve observation tool, the market has priced in a 69% chance of a 25 basis point rate cut decision on September 18th, and a 31% chance of a 50 basis point cut. In other words, the market has fully priced in a rate cut by the Federal Reserve at the September meeting, with the only question being whether it will be a 25 or 50 basis point cut?

Charu Chanana, Head of Currency Strategy at Saxo, said that the abundance of labor force data this week is crucial to breaking the debate over whether there will be a 25 or 50 basis point rate cut in September.

"If the data remains strong, there is a higher possibility of a 25 basis point rate cut. However, if the non-farm employment data is weak, especially if the non-farm employment number is below 1.3 million, and the unemployment rate jumps again, it may push the interest rate market closer to pricing in a 50 basis point rate cut."

Economists predict that the US will add 165,000 jobs in August, higher than the 114,000 of the previous month.

Win Thin, Global Head of Market Strategy at Brown Brothers Harriman, said that last week's data confirmed what the market already knew. "That is to say, under the impetus of strong consumption, the US economic growth remains robust, even though deflation is still slowly but steadily continuing."

In terms of inflation, according to last Friday's PCE data, the Federal Reserve's preferred inflation indicator rose by 0.2% in July, in line with economists' expectations, which also gave the Federal Reserve a sigh of relief.

Thin said, "We are now at a very delicate moment, so we still believe that the Federal Reserve will start to cut interest rates in a very gradual way this month."

However, the market believes that the Federal Reserve will cut interest rates by a total of 100 basis points in the remaining three meetings of this year. This indicates that, if calculated at a 25 basis point cut per meeting, at least one of these three meetings will see the Federal Reserve cut rates by 50 basis points.

After the US holiday ended on Monday, the market resumed trading, and in the Asian market, the yield on the US ten-year Treasury bonds remained largely unchanged, continuing to be below 4%, at 3.915%.

In other currencies, the US dollar against the Japanese yen was reported at 146.50, up 0.3% for the day, but still close to the two-week low of 147.16 set on Monday. Analysts said that the yen's movement is likely just a squaring up of the fall on Monday, when the US market was closed, leading to scarce liquidity and sudden movements.

After surging 3.5% against the US dollar in August, the Australian dollar fell 0.8 to 0.6737 ahead of the release of the Australian Gross Domestic Product (GDP) report on Wednesday; the New Zealand dollar fell 0.75% against the US dollar, to 0.61875, a currency pair that had surged 5% the previous month.