EUR/USD today: US employment slows the dollar and the euro holds up

currencies EUR/USD: US jobs and the ECB lead forex today: EUR/USD today: US jobs

currencies EUR/USD: updated analysis with context for investors.

EUR/USD today: US jobs: updated analysis with context for investors.

EUR/USD

currencies EUR/USD starts the session with two shocks: eurozone inflation rose to 3.8% in September, above the expected 3.6%, while the pair trades near 1.1246 and is down 0.76% on the day. 3.8%

Analysis. The European data supports the euro because it renews pressure on the ECB, but the support is not straightforward: the market is still penalising growth and bond-market stress. If the dollar eases on the back of the Fed, EUR/USD may stabilise; if real yields in the US rise again, the rebound will have a ceiling.

Dollar

The US jobs report cooled the greenback. Non-farm payrolls rose by 29,000 in September, well below the expected 90,000, and the unemployment rate climbed to 4.2%. The dollar index was down 0.2% at 101.79 at 14:45 in Madrid (07:45 in Mexico City).

Analysis. This is the day’s broadest catalyst for equities and forex. Fewer jobs means less pressure for the Fed to tighten right now, yields fall, and that takes support away from the dollar. Be careful: this is not a linear signal. If the market reads it as serious economic cooling, the dollar may regain defensive demand.

USD/JPY

The yen is gaining traction after Tokyo core CPI came in at 2.7% year-on-year in September, versus 2.4% expected and 1.8% previously. USD/JPY is hovering around 157.565, down 0.32% on the session. 2.7%

Analysis. The market is once again pricing in another BoJ rate hike further ahead because services inflation and the broader core measure are accelerating. That supports the yen, but with one decisive caveat: as long as US rates remain high, any drop in USD/JPY may be more tactical than structural.

GBP/USD

Sterling rebounded moderately against the dollar in a session dominated by US jobs data. During the European morning, Reuters reported gains of less than 0.1% for sterling before the US labour data; afterwards, the bias for the dollar turned bearish.

Analysis. Washington matters more than London here today. GBP/USD may benefit from falling expectations of Fed rate hikes, but sterling needs its own catalyst to extend gains. If the market rotates into risk assets, sterling will follow; if risk aversion returns, the advance may cool quickly.

This article is general financial information and does not constitute investment advice.

Keep reading on the blog: EUR/USD today: BoJ, sterling and the Fed shake up currencies.