EURUSD trades cautiously above 1.1000 as attention focuses to the US NFP.
In Friday’s European session, the EURUSD traded in a tight range above the psychological support level of 1.1000. The major currency pair consolidates near 1.1030, while the US Dollar (USD) falls ahead of the September Nonfarm Payrolls (NFP) report, which is released at 12:30 GMT.
The US Dollar Index (DXY), which measures the value of the greenback against six major currencies, falls marginally to 101.80. However, it retains this week’s sharp. Recovery from the yearly low around 100.10.
Investors will pay particular attention to the US NFP report.
Investors will pay particular attention to the US NFP report, which will most likely affect the pace of the Federal Reserve’s (Fed) policy easing for the rest of the year. Economists forecast that US firms recruited 140K new jobs, a modest decrease from 142K in August. The unemployment rate is predicted to continue at 4.2%.
Average hourly earnings are expected to have increased at a slower rate of 0.3% month on month from 0.4% in August, with annual growth steady at 3.8%.
Based on the CME FedWatch tool, traders appear to have already altered their expectations for Fed rate cuts in November. The 30-day Federal Funds futures pricing data suggests that the chance of another drop in interest rates by
50 basis points (bps) in November fell to 33% from 53% a week earlier. The Fed’s odds for a big rate decrease in November dimmed sharply following the positive ADP Employment Change data for September and JOLTS Job Openings data for August.
Meanwhile, rising risks of inflation continuing persistent have prompted traders to reduce their large Fed big rate drop expectations. The ISM Services PMI report for September, released on Thursday, revealed that its component Prices Paid, which shows a change in input cost, increased at a faster rate to 59.4. The Services PMI, which measures activity in the service sector, which represents for two-thirds of the economy, rose sharply to 54.9 from 51.7 expectations and 51.5 in August.
Daily Market Movers EURUSD continues on the backfoot amid a bleak market environment.
EURUSD is trading sideways near 1.1030 during European trading hours, having found temporary support near 1.1000 on Thursday. The main currency pair aims to halt its five-day losing run. However, the pair may suffer additional pressure as negative market sentiment and the ongoing Middle East turmoil continue to weigh on risk-perceived assets such as the Euro (EUR).
Conflicts between Iran and Israel escalated following the assassination of Hezbollah leader Hassan Nasrallah, in response to which Tehran launched hundreds of ballistic missiles on military bases in the Tel Aviv vicinity.
Meanwhile, mounting anticipation that the European Central Bank (ECB) may slash interest rates again on October 17 has put the Euro on the back foot. Market expectations. Rate cuts by the ECB have become more likely as Eurozone growth concerns develop and the continent’s Harmonized Index of Consumer Prices (HICP) falls below the bank’s objective of 2% in September.
ECB board member Isabel Schnabel, who has remained an outspoken hawk, raised alarm about growth risks in a speech on Wednesday.
ECB board member Isabel Schnabel, who has remained an outspoken hawk, raised alarm about growth risks in a speech on Wednesday. “We cannot ignore the headwinds to growth,” Schnabel added. She also expressed confidence that inflation would decrease to 2% in a timely manner, with weakening labor demand and continued progress in disinflation.
