EUR/USD increased by more than 0.40% on Wednesday following US economic data that strengthened expectations for a rate cut by the Federal Reserve at the upcoming December 9-10 meeting. The pair is currently trading at 1.1668, having recovered from daily lows of 1.1617.
ADP indicates that US private companies have reduced employment at the quickest rate since 2023, increasing the likelihood of a Federal Reserve rate cut. The dollar declines even with a strong ISM Services PMI, as labor market weaknesses overshadow the resilience in the service sector. Eurozone PMIs show widespread improvement, as Lagarde confirms that inflation is in line with the ECB’s medium-term target of 2%.
> The Euro continues its upward trend as disappointing US employment figures weigh on the Dollar, while strengthening Eurozone PMIs enhance the positive momentum : The Dollar continued to decline following the release of employment data indicating that private companies reduced jobs at the quickest rate since 2023, according to an ADP report. In light of the current situation, money markets have assigned a 90% likelihood to a 25-basis point (bps) rate cut occurring next week. As a result, the EUR/USD’s rally persisted, even with the expansion of business activity in the US services sector in November, as reported by the Institute for Supply Management. In Europe, the President of the European Central Bank, Christine Lagarde, stated that “indicators of underlying inflation remain consistent with our 2% medium-term target,” and noted that the bank anticipates inflation to remain close to its 2% objective “in the coming months.” In November, the data indicates an improvement in HCOB Services and Composite PMIs for the Eurozone. Germany and France’s PMIs showed growth, whereas in Spain, the HCOB Services PMI indicated a slight deceleration, expanding at a reduced pace relative to October. Traders in the EUR/USD pair will be closely monitoring the upcoming Retail Sales data from Europe, along with remarks from ECB officials, particularly those from Vice-President Luis de Guindos. The upcoming schedule in the US will include November’s Challenger Job Cuts and Initial Jobless Claims for the week ending November 29.
Latest FX Rate Trends : Euro experiences an uptick due to mixed economic data from the US
- The recent US data had a minimal impact on the Greenback, as the ADP National Employment Change reported a decline of 32K in private payrolls for November, falling short of the anticipated 10K increase. The data indicated a decline in the US jobs market, strengthening expectations that the Federal Reserve will lower interest rates in the upcoming week.
- The ISM Services PMI for November exceeded expectations, rising to 52.6 from 52.4, surpassing the forecast of 52.1 and indicating growth in the sector.
- The Eurozone HCOB Services PMI has been revised to 53.6, up from 53.1, indicating its fourth consecutive monthly increase and reaching the highest level since May 2023.