Euro slips back below $1.16 as strong US jobs lift the dollar
The euro weakened back below $1.16 after US nonfarm payrolls rose 162,000 in August versus a 56,000 expected gain. Markets priced a near 58% probability of a Fed rate hike this month.
The euro weakened back below $1.16 as stronger-than-expected US employment data boosted the dollar and reinforced expectations for tighter Federal Reserve policy.
US nonfarm payrolls increased by 162,000 in August, significantly surpassing market expectations for a 56,000 gain and prompting markets to price in a near 58% probability of a Fed rate hike this month.
Attention is now gradually shifting toward the European Central Bank’s September 10 policy meeting.
Money markets continue to fully price in a 25-basis-point ECB rate hike to 2.5% next week, while assigning an almost 100% probability that the deposit rate will reach 3% by June 2027.
Such pricing implies two additional rate increases by mid-2027.
On the economic data front, Germany’s factory orders rose 2.5% in July, slowing from an upwardly revised 3.7% increase in June but comfortably exceeding market expectations for a 0.3% gain.