The Euro remains steady for the second consecutive day, failing to breach the 1.1600 level as risk appetite strengthens in light of the upcoming re-opening of the US government, following the House of Representatives’ vote on the stopgap funding bill.
EUR/USD is currently stabilizing around 1.1590 as market participants anticipate the House vote on the stopgap bill aimed at resolving the extended US shutdown. Federal Reserve officials present contrasting viewpoints, as Williams indicates a potential for balance-sheet expansion while Bostic emphasizes the importance of maintaining price stability. German inflation remains stable close to the ECB’s 2% target as market participants assess differing trajectories of central bank policies.
> The Euro remains stable as optimism grows regarding government reopening, although mixed messages from the Fed create some uncertainty : December rate-cut outlook: Late on Sunday, the US Senate approved a bill designed to end the shutdown, which is now proceeding to the House of Representatives. Steve Scalise, the Republican leader, stated that the vote is scheduled to take place around 7:00 PM. The passage of the bill will unlock a series of economic data that has been awaiting release, with the exception of the inflation and jobs data for October, as stated by the White House press secretary. Federal Reserve officials are taking center stage in a context of limited economic data. New York Fed’s John Williams discussed the potential for a resumption of balance sheet expansion, while Atlanta Fed’s Raphael Bostic adopted a hawkish stance, prioritizing price stability over employment. He noted that there is no indication of a significant decline in the labor market. Concerning monetary policy, reports stated “The Fed is Increasingly Torn Over a December Interest-Rate Cut,” suggesting that the Federal Open Market Committee is divided between prioritizing the labor market and addressing persistently high inflation. In Germany, inflation remained stable in October, aligning closely with the European Central Bank target of 2%.
Latest FX Rate Trends : EUR/USD remains stable near 1.1580
- The US Dollar Index, which monitors the performance of the American currency against six others, remains steady at approximately 99.49, reflecting a slight increase of 0.02%.
- Boston Fed President Susan Collins stated that “Elevated inflation warrants still mildly restrictive policy,” further noting that she has not observed “an increase in downside employment risks since the Summer.”
- The most recent US employment figures indicated potential vulnerabilities within the labor market. ADP disclosed that private companies reduced their workforce by an average of 11,250 jobs per week during the four-week period ending October 25. Simultaneously, Challenger, Gray & Christmas reported that US employers reduced their workforce by 153,074 jobs in October, an increase from the 55,597 layoffs reported in October 2024, marking the highest figure for that month in twenty years.
- In terms of monetary policy, current money market indicators reflect a 60% likelihood of a 25 basis point reduction at the Federal Reserve’s December meeting, as per reports.
- Isabel Schnabel indicated that there is “positive underlying momentum” in the euro area economy, while also highlighting that services inflation continues to be persistent. She noted that inflation risks are “tilted slightly to the upside,” highlighting the importance for policymakers to concentrate on core inflation dynamics.
- On Wednesday, the German inflation data indicated that HICP increased by 0.3% month-on-month in October and 2.3% year-on-year, slightly lower than September’s 2.4% annual figure, suggesting a modest reduction in price pressures.