The Euro experienced a slight decline on Thursday as market participants analyze the latest US employment figures while preparing for the upcoming release of the Federal Reserve’s favored inflation measure, the Core Personal Consumption Expenditures Price Index. Currently, the EUR/USD is positioned at 1.1649, reflecting a decrease of 0.19%.
US Initial Jobless Claims experienced a significant decline, bolstering the Dollar’s standing relative to the Euro. Market participants currently perceive an 85% probability of a Federal Reserve rate reduction in the upcoming week. ECB President Lagarde anticipates that inflation in the Eurozone will stay close to 2% in the upcoming months.
> EUR/USD is positioned for additional gains amid the potential for a Fed rate cut : The narrative surrounding the financial markets remains consistent, with investors anticipating December 10, the Fed’s critical day. The recent economic data from the US provided support for the Dollar, as Initial Jobless Claims for the week ending November 29 experienced a significant decline, suggesting that the labor market remains robust. In contrast, the Challenger Jobs Cut data indicated that employers eliminated more than 70,000 positions in November, marking the highest level for that month since 2022. Considering the fundamental backdrop, market participants have assigned an 85% probability to a Fed rate cut occurring next week. However, this situation may shift if the upcoming release of the Fed’s preferred inflation measure, the Core Personal Consumption Expenditures Price Index for September, exceeds the 3% mark on Friday. The Euro finds its primary support from the European Central Bank, which has established interest rates at approximately 2%. The ECB has indicated that the easing cycle has concluded, and Lagarde’s comments on Wednesday emphasized, “inflation to stay near 2% in months ahead.” In October, Retail Sales data in the Eurozone surpassed expectations, while Construction PMI figures for the Eurozone, Germany, France, and Italy showed improvement, although they still remain in contractionary territory.
Latest FX Rate Trends : Euro strengthened following Lagarde’s remarks, while the Dollar remains weak
- The Dollar is set to weaken further; however, at the time of this writing, the US Dollar Index, which measures the currency’s performance against six major currencies, shows an increase of 0.19%, currently at 99.05.
- Initial Jobless Claims for the week ending November 29 registered at 191K, which is below the anticipated 220K and last week’s adjusted figure of 218K. Continuing Claims for November 22 decreased to 1.939 million, down from 1.943 million the previous week.
- Challenger, Gray & Christmas reported that employers announced 71,321 job cuts in November. This figure indicates a 24% rise relative to the same timeframe last year, yet reflects a 53% decline from the figure noted in October of this year.
- ECB President Lagarde noted that the Eurozone economy is performing well, supported by consistent household spending and a robust labor market. The central bank is anticipated to maintain rates at their current level during the meeting on December 18.