The foreign exchange markets witnessed dramatic movements after negative US jobs data. The GBP/USD currency pair became bullish, rising above 1.3250 and thus recovering yesterday’s losses. Britain’s fall from grace After a six consecutive days of decline, the British pound was able to find some support on Friday. Yet it was buoyed by the dismal jobs numbers.
Traders reacted to that dismal US NFP figure by sending the EUR/USD significantly higher. It exploded through the 1.1550 barrier. The euro’s value increased tremendously, confirming a bullish momentum. This increase is a clear sign of increasing confidence returned to the euro area economy, whose performance over the summer has been surprisingly strong.
The euro area’s economic outlook has been enhanced by recent developments, including a deal between the European Union and the United States, along with heightened spending plans from Germany. However, despite these positive indicators, risks remain. Analysts suggest that there may still be a final interest rate cut later this year or as early as 2026 for the EUR/USD pair.
Gold prices surged to new weekly highs near $3,350. This was quite a historic surge that came right after the disappointing US jobs report, which disappointed expectations by a sizeable margin. The precious metal jumped in value during the second half of the day. This rise was driven by a related plummet in US Treasury bond yields. The move in yields has led markets to reassess the Fed’s rate trajectory. Consequently, gold is seeing renewed appeal as a safe-haven asset.
“Gold advances to fresh weekly highs around $3,350 after US NFP” – FXStreet
Overall, as the currency market shifted, brokers pointed to tight spreads. In addition, they suggested rapid execution platforms for traders hungry to take advantage of moves in pairs such as EUR/USD. Following the weak NFP print, a perfect storm has been brewing for traders to re-evaluate their bets against US monetary policy.
In marked contrast to the ECB, the US Federal Reserve has been very dovish considering what’s happening to the US economy. As the ECB just announced a new call for projects, no further rate cuts are expected in the short term.
“Euro area – New ECB call: No further cuts in scope” – FXStreet
This resilience of the euro area economy remains highly attractive to investors. Features Analysts are cautiously optimistic about the euro’s trajectory. They point to high spending plans and a possible EU-US trade agreement as positive influences that could help improve growth prospects.
The dismal performance of the US jobs report weighed heavily on GBP/USD and EUR/USD. It created waves in many other financial markets. Specifically, traders are fixated on wage indicators. A deepening rate would force the Federal Reserve to move one last ‘insurance cut’!
“GBP/USD turns positive above 1.3250 on disappointing US jobs data” – FXStreet
The ongoing adjustments in both currency pairs reflect broader concerns about economic growth and monetary policy in the United States. As market participants grapple with all of these changes, volatility will surely continue over the next few weeks.