Weak US data fuels Fed cut bets

The US dollar softened on Wednesday after JOLTS data and US factory orders confirmed a labour market slowdown, boosting the Euro despite a softer EU PMI.

The EURUSD recovered ground following Tuesday’s losses that drove the pair below key support levels around the 50 and 20-day SMAs. A confirmation of weakness in the US labour market by JOLTS data, increased the chances of a rate cut by the Federal Reserve. The pair trades at 1.1679, up 0.37%.

The Job Openings and Labor Turnover Survey (JOLTS) in July, showed that vacancies fell from 7.44 mln a month ago to 7.18 mln, according to the Bureau of Labor Statistics (BLS). Hirings increased by 41,000, while layoffs rose by 12,000.

Economists attributed the ongoing labour market slowdown to tariffs imposed by President Donald Trump.

At the same time, the US Census Bureau showed that Factory Orders contracted by -1.3% MoM in July, slightly better than expectations for a -1.4% decline. Combined with Tuesday’s ISM Manufacturing PMI — which contracted for the sixth consecutive month — the data reinforced concerns that factory activity continues to weaken.

Consequently, the DXY Dollar Index, which tracks the performance of the greenback’s value against a basket of six currencies, was down 0.25% at 98.06.

Broad Dollar weakness, sponsored a leg up in the EURUSD as the latest HCOB Services PMI in August for the European Union missed forecasts of 50.7, came in at 50.5.

Other data in the EU showed that Producer Prices in the EU increased by 0.4% MoM in July, down from 0.8% in June. In the twelve months to July, prices rose 0.2%, down from 0.6% a year ago.

Market participants await Friday’s Nonfarm Payrolls report. Economists anticipate an increase of 75,000 jobs in August, and it expect a rise in the Unemployment Rate, from 4.2% to 4.3%.