- EUR/USD gains ground amid increasing bets for the Fed rate cut in December.
- CME FedWatch Tool suggests pricing in 36% odds of a rate cut in December, up from 30% a day ago.
- ECB’s Gabriel Makhlouf said current monetary policy is appropriate, with any adjustment unlikely unless a significant change occurs.
EUR/USD edges higher after a flat previous day, trading around 1.1540 during the Asian hours on Friday. Traders await preliminary HOCB Purchasing Managers Index (PMI) data for November from Germany and the Eurozone due later in the day. Focus will be shifted toward the US S&P Global PMI data later in the North American session.
The EUR/USD pair steadies as the US Dollar (USD) eases after a five-day rally, with September jobs data boosting expectations of a Fed rate cut in December. The CME FedWatch Tool suggests that financial markets are now pricing in a 36% chance that the Fed will cut its benchmark overnight borrowing rate by 25 basis points (bps) at its December meeting, up from 30% probability that markets priced a day ago.
Nonfarm Payrolls (NFP) in the United States (US) rose by 119,000 in September, compared to the 4,000 decrease (revised from +22,000) recorded in August. This figure surpassed the market expectation of 50,000. The Unemployment Rate ticked up to 4.4% in September from 4.3% in August. The Average Hourly Earnings held steady at 3.8% YoY, compared to the market expectation of 3.7%.
The Euro (EUR) maintains its position amid the cautious sentiment surrounding the near-term European Central Bank’s (ECB) monetary policy outlook. The ECB is widely expected to keep rates unchanged through the end of 2026, with inflation hovering near its 2% target, stable economic growth, and unemployment at record lows.
ECB Governing Council (GC) member and Governor of the Central Bank of Ireland, Gabriel Makhlouf, said on Thursday that the current monetary policy is appropriate and any adjustment is unlikely, unless there is a material change.
