Euro Climbs to $1.17 on Broader Dollar Weakness
The euro climbed above $1.17, its strongest level since late July, as broad US dollar weakness followed the latest report on jobs data that signalled further cooling in the labor market.
The report reinforced expectations of a Fed rate cut later this month, with markets now pricing around 66bps of easing in 2025. Following a week of poor labour market data, the market now faced an inevitable rate cut on 17 September, and analysts expressed that the only debate is whether it will be 25bp or 50bp.
Inflation will be the last main data point ahead of the Federal Reserve’s 17 September FOMC interest rate decision, according to ING note.
Analysts said there is likely to be more evidence of goods price inflation being triggered by tariffs, but remember that core goods – items most vulnerable to tariff impact – are only 19% by weight of the inflation basket.
The US economy added just 22K jobs in August, well below the 75K forecast, while the unemployment rate rose to 4.3%, the highest since 2021 and in line with expectations.
Focus now shifts to next week’s ECB meeting, where policymakers are widely expected to leave rates unchanged for a second time amid a stable growth outlook and inflation near target.
The eurozone economy expanded 0.1% in Q2, while inflation came in at 2.1% in August. Meanwhile, fiscal risks are back in focus in Europe amid the prospect of higher defense spending and increased German infrastructure investment. #Euro Climbs to $1.17 on Broader Dollar Weakness#
