Euro Decline Against the Dollar
The euro (EUR) dropped further against the US dollar (USD) on Thursday as the dollar gained momentum following the release of US labor market data. At that moment, EUR/USD was around 1.1600, marking its weakest point since December 2nd.
According to the U.S. Department of Labor, new jobless claims fell to 198,000 for the week ending January 10, which was below the expected 215,000. The previous week’s claims were revised down from 208,000 to 207,000.
The four-week moving average of initial jobless claims also saw a decrease, dropping from a revised 211,500 to 205,000.
On another note, regional manufacturing data improved as well; the Empire State Index rose from -3.7 to 7.7, while the Philadelphia Fed survey increased from -8.8 to 12.6.
The U.S. Dollar Index (DXY), which measures the dollar’s value against a basket of six major currencies, climbed to around 99.35, its highest since December 3 and its highest point in over a month.
Chicago Fed President Austan Goolsby expressed his approval of the figures, indicating that he wasn’t “surprised” by the low unemployment claims. He pointed out that employment remains strong and overall growth is “good.” Additionally, he remarked that the latest data shows ongoing stabilization in the labor market.
Regarding monetary policy, Goolsby still anticipates a rate cut from the Fed this year but emphasized the need for new data to support that expectation. He suggested that significant rate cuts could happen only if clear evidence indicates a decline in inflation. He reiterated that the primary challenge for the Fed remains getting inflation back to the 2% target.
In contrast, Atlanta Fed President Rafael Bostic adopted a more cautious perspective, stating that inflation is still too high and that the central bank needs to maintain vigilance with its policy. Bostic mentioned that he foresees inflationary pressures persisting until 2026, but acknowledges that economic growth appears robust, with GDP growth projected to surpass 2% in that same year.
