Published on 02.09.2022 16:14

The Euro is trading higher against the US dollar as we get ready to enter the American trading session as market participants eagerly await the latest jobs report from the US that will more than likely dictate the size of the next rate hike from the US Federal Reserve.

Analysts expect another strong Reading from the Non Farm Payrolls report, following up from last months stellar figures which shows the US employment market is powering ahead while at the same time giving the Fed free reign to hike rates.

The unemployment rate is also expected to drop which shows the higher rates in the US have not deterred employers from taking on new workers.

We expect the series to have continued to advance strongly in August (370K), but at a more moderate pace following the eye-popping 528K increase registered in July, which was a five-month high. We look for the solid gain in employment to also be reflected in another decline in the unemployment rate to 3.4%.

Solid figures will all but guarantee the Fed hikes rates by another 75 basis points this month which will push the US benchmark interest rate towards 3 percent which is much higher than rates currently in Europe. This will probably cause the greenback to skyrocket against not only the Euro, but all the major currencies.

A disappointing labour market report might cause a selloff in the USD, but the immediate market reaction is more likely to be short-lived on the back OF Growing recession fears in Europe and economic headwinds stemming from fresh COVID-19 lockdowns in China. The ongoing war between Ukraine and Russia should help limit any serious losses for the US dollar.


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