The EUR/USD currency pair has been on a rollercoaster ride, trading near 1.1773 after hitting an intraday high of 1.1830. This is the Euro’s highest point since September 2021. Now, the Euro was down a bit from its recent high. It was the U.S. economic data, notably revisions to GDP and good initial jobless claims data that pushed this.
While on Tuesday, the common currency peaked up to 1.1830 before backtracking. This sudden movement serves as a reminder of the current volatility permeating the foreign exchange market. The Euro has jumped to a multi-year high, demonstrating its growing strength against the Dollar. The recent softening is a reminder that market sentiment remains very sensitive to changing economic signals.
The Job Openings and Labor Turnover Survey (JOLTS) indicated a significant increase of 374,000 job openings, bringing the total to 7.769 million. Regardless, this wave of new job openings highlights an overall strong labor market, emphasizing upward risks for future monetary policy action.
As important as the strong job data was, inflation metrics proved to be the key driver of expectations for the market. Core inflation held steady at 2.3%, a five-year low. This stability in core prices is good news, suggesting inflationary pressures are not as strong as we worried they would be.
The Institute for Supply Management (ISM) Manufacturing Purchasing Managers’ Index (PMI) took a baby step to the upside. It moved up to 49 in June, an increase from 48.5 in May. That was well above the expected 48.8. It indicates a modest expansion in the manufacturing sector, but it too still indicates a contraction in that sector.
As a result, the headline Consumer Price Index (CPI) jumped year-over-year to 2.0% in June, from 1.9% in May. This usage figure is in line with market expectations. It is right in line with the European Central Bank’s (ECB) inflation target, demonstrating the trade-off between supporting economic recovery and maintaining price stability.
As these recessionary economic indicators continue to materialize, market participants are increasingly turning their attention toward Thursday’s Nonfarm Payrolls (NFP) report. Our forthcoming release is one of our most anticipated ever. Beyond this, it will provide rich insights into emerging trends in the labor market and indicate possible trajectories for monetary policy.