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(Bloomberg) — US stock futures fell as traders braced for jobs data that will be critical in determining the health of the US economy and the size of a Federal Reserve interest rate cut later this month.

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Nasdaq 100 contracts were down more than 1% while S&P 500 futures pointed to a fourth day of declines. Europe’s Stoxx 600 dropped 0.6% and is on course for its worst week since the meltdown of early August. Asian equities were mixed, while Hong Kong stock trading was shut due to a typhoon.

Bloomberg’s gauge of the greenback retreated for a third day amid mounting bets that worse-than-expected monthly payrolls data would spur a kick-off in the US policy easing cycle with a jumbo cut. The yield on 10-year Treasuries dropped two basis points to 3.7%.

Friday’s report will help policymakers gauge whether the US economy is heading for a soft landing or a recession after a week of mixed numbers that whipsawed markets. Swap traders are fully pricing in 25 basis points of cuts when Fed officials meet in two-weeks time, with a roughly 35% chance of a 50 basis-point reduction.

“There’s likely to be volatility in markets as we work through whether or not we can actually have a soft landing,” said Brent Schutte, chief investment officer at Northwestern Mutual Wealth Management Co. “Investors need to be ready for more volatility, based upon a transition from a rate-hike cycle to a rate-cut cycle.”

Forecasters anticipate the report will show a bounce in hiring and a tick lower in the unemployment rate in August, marking a stabilization after July. Payrolls probably rose by 165,000 last month following July’s 114,000 increase, according to the median estimate in a Bloomberg survey of economists. Unemployment probably edged down to 4.2%.

“Risk markets are sensitive to growth dynamics rather than to interest rates right now, said Bilal Hafeez, chief executive officer and head of research at Macro Hive. “If we were to see a weak number, risk markets such as equities will take that badly.”

Currency strategists see a strong chance the yen will test its August high versus the dollar if the payrolls data boost bets for a 50 basis-point move. The Japanese currency rose to trade below 143 against the dollar on Friday.

The yen “is where the action will be” if there is any surprise in the figures, said Gareth Berry, a strategist at Macquarie Group Ltd. in Singapore.

Oil headed for its biggest weekly loss in almost a year on concerns about soft demand and ample supply, even as OPEC+ delayed a planned increase in output by two months. Iron ore remained on track for its worst week since March, with few signs of a recovery for China’s steel market.

Key events this week:

  • Eurozone GDP, Friday

  • US nonfarm payrolls, Friday

  • Fed’s John Williams speaks, Friday

Some of the main moves in markets:

Stocks

  • The Stoxx Europe 600 fell 0.6% as of 9:55 a.m. London time

  • S&P 500 futures fell 0.7%

  • Nasdaq 100 futures fell 1.2%

  • Futures on the Dow Jones Industrial Average fell 0.4%

  • The MSCI Asia Pacific Index rose 0.1%

  • The MSCI Emerging Markets Index rose 0.1%

Currencies

  • The Bloomberg Dollar Spot Index fell 0.2%

  • The euro was little changed at $1.1119

  • The Japanese yen rose 0.6% to 142.53 per dollar

  • The offshore yuan rose 0.1% to 7.0815 per dollar

  • The British pound was little changed at $1.3171

Cryptocurrencies

  • Bitcoin fell 0.6% to $55,729.42

  • Ether fell 0.8% to $2,347.15

Bonds

  • The yield on 10-year Treasuries declined two basis points to 3.70%

  • Germany’s 10-year yield declined four basis points to 2.17%

  • Britain’s 10-year yield declined three basis points to 3.88%

Commodities

  • Brent crude fell 0.2% to $72.55 a barrel

  • Spot gold was little changed

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Winnie Hsu, Aya Wagatsuma and Julien Ponthus.

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