Tonight’s U.S. nonfarm payrolls data could be the most important set of data this week. The market has been pricing in the probability of a rate hike, but today’s ADP figure came in below expectations. At the ECB’s Sintra annual forum, Warsh also said that inflation risks have declined compared with before. Although he did not signal a rate cut, his tone was clearly more moderate than earlier. While ADP does not represent nonfarm payrolls, it does at least suggest that the labor market is not as strong as it was in the past few months, and rate-hike expectations have started to loosen.

If tonight’s nonfarm payrolls are also below expectations, the odds of a rate hike in September will most likely continue to cool. Gold, U.S. equities, and the crypto market all have a chance to see a round of sentiment recovery; but if the data again beats expectations, the market will once again reprice the idea that high interest rates will be kept higher for longer. So tonight’s nonfarm payrolls data will determine whether the U.S. economy starts to hit the brakes—once employment cools, the Fed’s subsequent policy expectations will shift accordingly.