The EUR/USD pair is recovering from recent losses, trading around 1.0880 during Monday’s Asian hours. This rebound is driven by a weaker US Dollar (USD) following the release of disappointing US October Nonfarm Payrolls (NFP) data. However, ongoing uncertainty regarding the US presidential election may prompt safe-haven flows, potentially capping further gains for the currency pair.
Data from the US Bureau of Labor Statistics (BLS) revealed that NFPs increased by only 12,000 in October, following a downwardly revised gain of 223,000 in September (originally reported as 254,000). This result fell significantly short of market expectations, which anticipated a rise of 113,000. The Unemployment Rate held steady at 4.1%, aligning with consensus forecasts.
As the US presidential election approaches, the final New York Times/Siena College poll indicates a competitive race between Democratic candidate Kamala Harris and Republican nominee Donald Trump across seven key battleground states. The poll shows Harris with slight leads in Nevada, North Carolina, and Wisconsin, while Trump holds a narrow edge in Arizona. Close contests are also observed in Michigan, Georgia, and Pennsylvania, with all matchups within a 3.5% margin of error.
Meanwhile, the Euro has found support from stronger-than-expected economic performance in the Eurozone. Preliminary data indicated that the Eurozone Harmonized Index of Consumer Prices rose to 2.0% year-over-year in October, up from 1.7% previously and exceeding forecasts of 1.9%. Additionally, the annual core inflation rate remained steady at 2.7%. Eurozone Gross Domestic Product (GDP) grew by 0.4% quarter-over-quarter in Q3, doubling the growth rate from Q2 and surpassing the anticipated 0.2%.
These positive economic indicators have led traders to reevaluate expectations for a potentially larger-than-usual rate cut by the European Central Bank (ECB) in December. Markets are now fully pricing in a 25 basis point reduction in the ECB’s deposit rate for December, which would mark the fourth cut this year following reductions in October, September, and June.
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