EUR/USD declines for the fourth consecutive day on Thursday, influenced by stronger-than-anticipated jobs economic data. The data from the Eurozone confirmed to traders that the European Central Bank’s easing cycle has concluded, as producer prices in the region experienced deflation in December. Currently, the pair is trading at 1.1652, reflecting a decrease of 0.19%.
EUR/USD continues to decline as strong US employment figures drive market sentiment. Anticipation for dollar demand prior to Nonfarm Payrolls. DXY surpasses the 200-day SMA, indicating possible upward movement towards 99.00 if the gains are maintained. Eurozone producer prices have decreased, supporting the view that the ECB’s easing measures are mostly at an end.
> The Euro is experiencing a decline as positive labor indicators from the US overshadow weaker data from the Eurozone: Market participants are shifting their focus to the Dollar in anticipation of the upcoming US Nonfarm Payrolls report, influenced by robust jobs market statistics. On Wednesday, the ADP figures were robust, and the Challenge Job Cuts report for December indicated that companies reduced their workforce less than they did in November. The data revealed that US jobless claims indicated a lower-than-anticipated number of Americans seeking unemployment benefits. As a result, the US Dollar Index, which monitors the dollar’s performance against a selection of currencies, has increased by 0.19%, reaching 98.91, and has exceeded the important technical 200-day Simple Moving Average level, currently positioned at 98.87. A daily close above the latter may drive the DXY past the 99.00 threshold. The dovish remarks made by Fed Governor Stephen Miran were largely overlooked by market participants, who had already factored in two rate cuts, as indicated by Prime Market Terminal data. In the interim, US Treasury Secretary Scott Bessent urged Federal Reserve officials to avoid postponing interest rate cuts in order to stimulate economic growth. In Europe, the agenda was full, as inflation persisted in its decline and Consumer Confidence showed signs of improvement. Nonetheless, the Economic Sentiment Indicator weakened in December, influenced by service providers, retailers, and consumers. Upcoming on the Eurozone economic calendar are Retail Sales figures for the region, insights from ECB’s Philip Lane, and data on German Industrial Production. In the US, the calendar will include Nonfarm Payrolls, the release of the Unemployment Rate, the University of Michigan Consumer Sentiment, and housing data.
Latest FX Rate Trends: Euro impacted by US employment figures
- For the week ending January 3, US Initial Jobless Claims were reported at 208K, which is below the anticipated 210K, although it is a slight increase from the previous week’s figure of 200K, as stated by the U.S. Department of Labor.
- The data supports indications of a slowly enhancing labor market, as evidenced by the December Challenger Job Cuts report from Challenger, Gray & Christmas, which revealed that employers announced 35,553 layoffs, almost half of November’s 71,321.
- The US Goods and Services Trade Balance exhibited a notable enhancement in October, as the deficit decreased to $29.4 billion from $48.1 billion, contrary to forecasts predicting an expansion to $58.9 billion. The unexpected enhancement was propelled by a significant drop in imports, especially in the pharmaceutical sector.
- The Federal Reserve Bank of New York Survey of Consumer Expectations revealed a varied perspective among households. Short-term inflation expectations have increased, whereas medium- and long-term expectations have stayed the same.
- In December, one-year inflation expectations increased to 3.4%, up from 3.2%. Meanwhile, expectations for three- and five-year periods remained unchanged at 3.0%, indicating ongoing inflation concerns that are persistent yet manageable in the longer term.
- In the Eurozone, the Producer Prices Index rose to 0.5% in October, up from 0.1%, surpassing market expectations which anticipated a 0.2% increase. Year-on-year, producer prices contracted at a rate of 1.7%, a decrease from -0.5% in October, yet still reflecting a slower contraction than the -1.9% anticipated by market analysts.
- Additional data indicated that there was an improvement in Consumer Confidence and the Business Climate in December. German Factory Orders for November increased by 5.6% MoM, surpassing estimates of 1%, up from 1.6% in October.