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05/08/24
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EUR Extends Gains on Concerns Over US Economy
On Monday, the euro posted strong gains and EUR/USD traded at about 1.0982, 0.68% higher for the day in the North American session. The euro rose to 1.1008 earlier, up 0.78% and the highest level since Jan. 2.
The euro soared 1.09% on Friday after a weaker-than-expected US nonfarm payrolls increased worries about the US economy.
The Federal Reserve has pushed inflation down to 3%. Although still higher than the 2% target, it is low enough to start cutting interest rates. The US economy was slowly cooling and everything seemed to point to a 0.25% cut in Sept.
The scenario of a soft landing has however been rudely punctured by weaker-than-expected data from the US, especially last week’s July employment report. July nonfarm payrolls slowed to 114K, much lower than June’s revised 179K and the market estimate of 175K.
The unemployment rate also rose to 4.3% from 4.1% (estimated at 4.1%) and wage growth eased to 0.2% from 0.3% m/m (estimated at 0.3%).
The services sector in Europe in July decelerated. The Eurozone Services PMI dropped from 52.8 a month earlier to 51.9, and as per expectations. In Germany, the eurozone’s biggest economy, Services PMI dropped from 53.1 in June to 52.5 and lower than the 52.0 market estimate.
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