09/09/2024
Written by: Ian Morley
Summary:
The U.S. dollar weakened further yesterday, driven by revised payroll data that fell short of expectations. Additionally, a more dovish tone from the recent Federal Reserve meeting revealed that some members had contemplated rate cuts as early as July. In response, GBP/USD surged to levels not seen since July 2023, while EUR/USD climbed to its highest point in 13 months.
Outlook:
Overnight, the U.S. dollar managed to regain some of its lost ground, with attention now shifting to Fed Chair Powell’s upcoming speech at the Jackson Hole symposium tomorrow. Before that, markets will digest August PMI data from Europe, the UK, and the U.S., along with the weekly U.S. jobless claims report. For the euro, focus will also be on Q2 wage negotiations and their potential impact on future interest rate decisions in Europe. If wage growth remains robust, it could signal fewer rate cuts than anticipated, which would be supportive of the euro. The Jackson Hole event remains a key risk factor for the U.S. dollar.