Sterling, Euro Decline Against Dollar After US Job Report
FOREX Market: Sterling gave up early gains against the US dollar, slipping back toward $1.36, its weakest level since mid-June, as investors rushed to the dollar following a stronger-than-expected US jobs report.
Earlier in the session, sterling had been supported after Prime Minister Keir Starmer defended Chancellor Rachel Reeves amid speculation about her future, affirming she would remain chancellor “for a very long time to come.” This helped ease concerns that a potential replacement might adopt a looser fiscal stance with increased borrowing.
On the monetary policy front, markets have priced in a Bank of England rate cut as soon as August, following dovish remarks from officials.
Governor Bailey said it was too early to fully assess the inflationary impact of tariffs but reiterated that the trajectory of interest rates is “downwards.” Meanwhile, Bank of Englant policymaker Alan Taylor urged faster rate cuts, warning of a heightened risk of a hard landing for the UK economy.
Euro Pulls Back Against Dollar after US Job Report
The euro slipped toward $1.17, retreating from a recent four-year high, as investors flocked to the dollar in response to a stronger-than-expected US jobs report. At the same time, markets digested comments from European Central Bank policymakers and the minutes from the ECB’s latest policy meeting.
Speaking at the ECB Forum on Central Banking, President Christine Lagarde welcomed the June inflation print, which aligned with the central bank’s 2% target, but cautioned about “two-sided risks” linked to rising geopolitical tensions and increasing economic fragmentation.
Other ECB officials signaled that interest rates are likely to be kept on hold at this month’s meeting, following eight consecutive cuts to the deposit rate since June 2024, amid persistent concerns over global trade uncertainty, instability in the Middle East, and the euro’s recent appreciation.
The euro’s strength is positive for the eurozone economy despite speculation that European Central Bank officials are growing concerned over the single currency’s appreciation, ING’s Chris Turner says in a note.
Such concerns would be that a stronger euro lowers import prices and brings down inflation while making eurozone exports more expensive, he says. However, Europe should be taking advantage of this “global euro moment” as previously hailed by ECB President Christine Lagarde, the analyst says
Markets React to US Job Report
US benchmark equity indexes are on track to close higher on Thursday after the US added 147,000 jobs in June, topping expectations. The Dow Jones Industrial Average rose 0.7% at 44,811.23, the Nasdaq Composite advanced 1.1% to 20,613.27, and the S&P 500 gained 0.8% to 6,279.76.
The US job market continues to improve along despite heightened uncertainty about the economy and how President Donald Trump’s tariffs could pan out for global trade. The economy added a stronger-than-expected 147,000 jobs in June, and the unemployment rate ticked down to 4.1% from 4.2%, according to Bureau of Labor Statistics data released Thursday.
Last month’s gains, which landed above expectations for 117,500 jobs to be added, marked a slight increase from May’s total, which was revised up slightly (5,000 jobs) to 144,000. April’s job gains were revised higher by 11,000 jobs, for a net gain of 158,000.
Those revisions and Thursday’s data bring the three-month average job growth to 150,000. However, despite the continuation of fairly solid monthly employment gains, Thursday’s jobs report once again showed several potentially concerning signs, including some fissures that may be spreading under the weight of the Trump administration’s economy-shifting policies. Neimeth Rises by 60.5% as Shareholders Approve Capital Raise
