EUR/USD remains stable late in the North American session as market participants process a lackluster jobs report and overlook the implications of the US government shutdown. The absence of a consensus between the White House and Democrats would extend the shutdown and postpone the release of US economic data. The pair is currently trading at 1.1720, remaining unchanged.
EUR/USD continues to exhibit a lack of momentum following the decline in US private hiring for September, highlighting vulnerabilities in the labor market. Fitch Ratings indicates that the shutdown reduces U.S. GDP growth by 0.1–0.2% on a weekly basis, while maintaining the current outlook for the debt credit rating. The Eurozone PMI exceeded forecasts, and inflation showed an uptick; however, the ECB is anticipated to maintain its policy stance following Lagarde’s measured remarks.
> Euro remains stable around 1.1720 as investors weigh the implications of a report, ongoing government funding impasse, and consistent Eurozone economic indicators : The US ADP National Employment Change for September was disappointing, underscoring the fragility of the labor market. Business activity in the manufacturing sector in the US showed improvement, yet it contracted for the seventh consecutive month. In light of the current political turmoil in the US, Vice-President JD Bance expressed his belief that the shutdown will not be prolonged. He committed to taking all necessary actions in the upcoming weeks to guarantee that essential services are provided to the public. Fitch Ratings has indicated that a government shutdown does not pose an immediate threat to the “AA+ stable” creditworthiness of US debt. The agency disclosed that the shutdown is projected to diminish GDP growth by 0.1-0.2% on a weekly basis. In the Eurozone, the HCOB Manufacturing PMI for September surpassed expectations, while the Harmonized Index of Consumer Prices for the bloc increased slightly. In light of this, the European Central Bank is anticipated to maintain its current stance following President Christine Lagarde’s statement that the risks to inflation “appear quite contained in both directions.”
Latest FX Rate Trends: Fed’s Goolsbee adopts a hawkish stance, likely to limit the Euro’s advance
- Chicago’s Fed President Austan Goolsbee expressed concern regarding inflation, which continues to exceed the central bank’s 2% target. He noted that the shutdown exacerbates the situation, as it will delay the release of crucial economic data.
- ADP disclosed that private sector employment experienced an unexpected contraction of 32,000 in September, subsequent to August’s downwardly adjusted loss of 3,000 jobs. Markets were expecting an increase of no less than 50,000 positions.
- In the meantime, the ISM Manufacturing PMI increased to 49.1 from August’s 48.7, marginally surpassing the anticipated 49.0. Nonetheless, September represented the seventh consecutive month of contraction in the sector.
- Fitch Ratings indicated that the US Dollar will likely maintain its position as the world’s primary reserve currency, even amid increased policy uncertainty. They also noted that reversing prior Medicaid cuts is unlikely to significantly influence near-term deficit projections, as the majority of the fiscal impact is anticipated to occur post-2028.
- In September, Europe HICP increased by 2.2%, aligning with expectations, while it recorded a figure above 2% in August. The Core HICP remained unchanged at 2.3% year-over-year, consistent with projections. Simultaneously, the Eurozone HCOB Manufacturing PMI increased from 49.5 to 49.8 in September, aligning with expectations.