US Dollar Declines Amid Weaker-than-Expected Labour Market Data
The US dollar weakened overnight after a softer-than-anticipated US labour market report heightened investor concerns ahead of the crucial non-farm employment figures due later today. The August ADP employment report showed an increase of just 99,000 jobs, falling short of the 144,000 forecast and lower than July's downwardly revised figure of 111,000.
Looking ahead to today’s key US jobs report, expectations are that non-farm payrolls growth will edge up slightly to 130,000 in August. While the pace of job growth is slowing, July's sharp drop may have been exaggerated by temporary weather conditions, which are expected to normalize this month.
The unemployment rate is projected to stabilize at 4.2%, following a four-month rise. Although the rate may gradually increase due to slowing hiring, it is expected to do so steadily, barring significant layoffs. Several factors, including the broader economic environment, inflation trends, and the current market expectations for Federal Reserve actions, will influence how much further the US Dollar Index (DXY) could decline.
Euro Area Q2 2024 GDP Growth Projected at 0.3% QoQ
The euro area’s GDP growth for Q2 2024 is expected to come in at 0.3% quarter over quarter. This forecast includes an anticipated 0.1% decline in consumer spending and a 0.6% drop in fixed investment.
On the other hand, government spending is projected to rise by 0.6% for the quarter. Importantly, net trade—driven primarily by peripheral nations—is expected to contribute +0.4 percentage points to the overall GDP growth.
The euro has remained resilient during the US dollar's recent weakening phase, with the currency showing strong performance in Asian markets. However, in EUR/USD, significant resistance lies in the 1.125–1.1297 range, which could limit the euro's further gains in the near term.
