02.08.2025 17:20

The euro surged against the dollar on Friday, climbing over 1% to reach 1.1554 from 1.1391, fueled by unexpectedly weak US jobs data that significantly increased market expectations for Federal Reserve interest rate cuts. This dramatic rise followed a weaker-than-anticipated July US Nonfarm Payroll report, showing only 73,000 jobs added, a figure considerably lower than forecasts. Further dampening investor sentiment were downward revisions to the previous two months' job creation numbers, resulting in a net loss of 258,000 jobs for May and June.

This disappointing employment data, coupled with contraction in US manufacturing activity (as reported by the Institute for Supply Management) and declining consumer sentiment (University of Michigan Consumer Sentiment), painted a bleak picture of the US economy. The subsequent market reaction was immediate and pronounced, with traders swiftly adjusting their expectations for Federal Reserve policy. Prior to the jobs report, the anticipated interest rate easing by December was 34 basis points; however, after the announcement, CBOT December 2025 Fed funds futures contracts now reflect a substantially higher anticipated easing of nearly 62 basis points. Furthermore, the probability of a 25 basis point rate cut at the September Fed meeting has jumped to 76%, according to Prime Market Terminal data.

Conversely, positive economic news from the European Union appeared to have little impact on the EUR/USD exchange rate. July's Harmonized Index of Consumer Prices (HICP) in the EU remained at 2.4% year-on-year, exceeding projections of a slight decrease. Similarly, the core HICP held steady at 2.0%, slightly above expectations. The market's focus remained firmly on the implications of the weak US jobs data and the anticipated response from the Federal Reserve, ultimately driving the significant gains for the euro. Wall Street also experienced losses, reflecting broader concerns about a potential US economic slowdown.