EUR/USD Recovers on Eurozone GDP, US Job Data Influences

In Friday’s Asian session, the EUR/USD pair traded around 1.1670[1] to recover the losses. Market experts noted that the euro is getting support as traders anticipate the second-quarter GDP results of the Eurozone[2]. It is anticipated that the data[3] will reflect a consistent increase, where the economy is projected to have grown by 1.4% on an annual basis and 0.1% on a quarterly basis. The rebound of the pair is believed to show renewed trust in the euro, as focus is on the numbers ahead, which may be instrumental in influencing market sentiment on the European[4] growth outlook.

It has been reported[5] that the Euro is getting support because the investors are still sceptical about the European central bank policy outlook. On Tuesday, an ECB board member Isabel Schnabel[6] said interest rates were already slightly accommodative and added that she did not see the necessity of another reduction. Meanwhile, Governing Council member Gediminas Simkus[7] reiterated the same, saying that there was no need to increase the tariffs immediately. These remarks are assumed to be an indication that the ECB[8] will maintain the same rates of borrowing in the short run, to maintain a stable single currency.

The EUR/USD pair is believed to be receiving support due to the weakening of the US Dollar amidst increasing expectations of a Federal Reserve[9] rate cut in September. Market reports point out that such bets were sparked by softer than expected US job figures[10] on Thursday. Markets now believe the Fed will ease policy sooner than later as the CME FedWatch tool[11] shows more than 99% probability of a 25-basis-point decrease, compared to 87% a week ago.

Reportedly, the US Initial Jobless[12] Claims soared to 237,000 in the week ending 30 August compared to 229,000 and even higher expectations of 230,000. The ADP report[13] documented a sluggish 54,000 job growth in August, which is lower than the projected 65,000 and comes after 106,000 had been revised in July. Traders are now hoping that future labour market data[14] will be the Federal Reserve thinking of their next step in September. Economists[15] are predicting an increase in Nonfarm Payrolls of 75,000, and steady unemployment at 4.3%.

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USD/CAD Pauses as Weaker US Jobs Data Shifts Market Focus

The USD/CAD pair paused its four-day advance and traded near 1.3810[16] in Friday’s Asian session. The pair is believed to have relieved when the US Dollar got under pressure after US job figures[17] were announced as weaker than expected. Investors have now centred their attention on future labour market results[18], which may affect the policy view of the Federal Reserve in September. Markets anticipate August Nonfarm Payrolls[19] to reflect about 75,000 new jobs, and the unemployment rate is also projected to increase modestly to 4.3, and this keeps traders on the alert.

Market reports[20] note that the less-good economic data is raising the chances of a Federal Reserve rate cut in September, which will put pressure on the US Dollar. The CME FedWatch tool[21] shows that markets are currently giving more than 99% probability of a 25 basis point cut, as opposed to 87 a week ago. It is noted that the US Initial Jobless Claims[22] increased to 237,000 in the week ending 30 August, higher than the prior 229,000 and forecasts of 230,000. In the meantime, ADP figures[23] indicated that August gains in private employment increased 54,000, a far short of 65,000.

Market reports state that US President Donald Trump[24] has been planning to impose tariffs on imported semiconductors produced by companies that fail to move their manufacturing to the United States. Moreover, some reports[25] stated that the Trump administration is already contemplating a restart of talks on the US-Mexico-Canada free trade agreement. These measures have led some watchers to believe that Washington[26] is determined to increase local production as it renegotiates key trade agreements with its neighbours.

Canada[27] has declared monetary support to domestic manufacturers caught in the US tariffs, especially in automobiles, aluminium, and steel. Industry Minister Mélanie Joly[28] said the government is doing its best in supporting these sectors, and additional support actions will be announced. Prime Minister Mark Carney[29] has pointed out that discussions with the US revolve around these sectors because of close links in the supply chain. According to the market commentators, traders will look at the jobs report released today by Statistics Canada[30], where employment is likely to increase by 7.5K in August, but unemployment is likely to increase to 7% compared to 6.9%.

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NZD/USD Steady Near 0.5850 as US Jobs Data Weakens Dollar

The NZD/USD pair traded around the 0.5850[31] level in Friday's early Asian trading session. It is assumed that disappointing US job figures[32] have strained the US dollar in favour of the New Zealand Dollar. With the next US Nonfarm Payrolls (NFP) report due later today, traders are shifting their gaze now to the release of the August report, which is likely to give more indications as to the Federal Reserve policy outlook and market direction.

New US Department of Labour[33] data indicated first jobless claims increased to 237,000 in the week ending 30 August compared with 229,000 the week before and above the market expectation of 230,000. Meanwhile, the numbers released by ADP[34] show that the US private sector jobs had grown by 54,000 in August. Market reports note that this was significantly lower than July’s adjusted 106,000 increase, and was less than anticipated 65,000, indicating a milder employment trend in the American labour market.

Recent employment statistics indicated the weakness of the labour market, fuelling the anticipation that the Federal Reserve[35] will lower rates this month, putting pressure on the US dollar and lifting the pair. The focus today is said to shift towards the next US job market report. Analysts[36] project only 75,000 new positions in August with unemployment projected to increase to 4.3. Any hints of additional weakness would push the Greenback downwards as markets expect the Fed[37] to tighten its grip still further, adding to the probability of further rate declines in the future.

The expectation of a softer stance by the Reserve Bank of New Zealand (RBNZ)[38] is likely to place pressure on the New Zealand dollar. The central bank[39] has been reducing interest rates rather sharply since August 2024 and has indicated additional such cuts might follow. Market analysts[40] are of the opinion that two additional decreases could be made, this would bring down the Official Cash Rate to 2.50. Some reports[41] point out that this would be the lowest OCR since the middle of 2022, as concerns about economic conditions persist.

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USD/CHF Slips Amid Fed Rate Cut Hopes and Swiss Safe-haven Demand

The USD/CHF pair received some of its recent gains and traded around 0.8050[42] in Friday's Asian session. The fall is believed to be caused by a weakening of the US Dollar on prospects of further reductions in rates by the Federal Reserve[43] in September. This view was supported by softer-than-anticipated US employment data, issued on Thursday. As per the CME FedWatch tool[44], the likelihood of a 25-basis point reduction during the September meeting has now been priced in at anything above 99% by markets, a significant improvement over a week prior when the likelihood stood at around 87%.

Market reports[45] point out that the initial jobless claims in the United States rose to 237,000 in the week ended August 30, up from 229,000 the previous week and 230,000 the following week. The ADP employment data also showed a lower gain of 54,000 jobs in August, falling short of estimates of 65,000 and far short of the revised 106,000 in July. Certain market experts note that markets have shifted their attention to more labour statistics which potentially affect Federal Reserves[46] ruling in September. Economists believe that nonfarm payrolls[47] will increase by approximately 75,000 in August and the unemployment rate will probably remain at 4.3%.

Market commentators[48] point out that the USD/CHF pair has weakened and the Swiss Franc was supported by safe-haven demand. On Thursday, Swiss government 10-year bond[49] yield fell to 0.30%, nearly 5.5% in a global bond sell-off, as the world worried about growing debt, slow inflation, and the growing political pressure on central banks. The Swiss National Bank (SNB)[50] is likely to keep interest rates constant at 0% later this month, as Swiss inflation was recorded at a comfortable 0.2% in August, and this is within the 0%-2% target range.

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