ECB members split over interest rate cuts•Market awaits strong evidence on U.S. rate cuts
The euro rose in the European market on Wednesday against a basket of global currencies, consolidating above a two-week low against the U.S. dollar, as part of attempts to recover from low levels, amid reports that monetary policymakers at the European Central Bank are divided over whether to continue to make additional cuts after the expected cut later this month.
Starting today, investors are awaiting the release of a series of important data on the labor market in the United States, which will provide strong clues about the pace at which the Federal Reserve will cut US interest rates at its September meeting.Price outlook • Euro exchange rate today: The euro rose against the dollar by about 0.2% to ($1.1062), from the opening price of trading at ($1.1043), and recorded a low at ($1.1036).
The euro ended Tuesday’s trading down 0.25% against the dollar, in the fourth loss in the last five days, and recorded a two-week low of $1.1026.
According to sources familiar with the discussions, monetary policymakers at the European Central Bank are increasingly at odds over the growth prospects, a disagreement that shows the divide over the future of further cuts in European interest rates.
Some ECB members are concerned about weak and stagnant economic activity in the single region, while others focus on ongoing inflation pressures.
The European Central Bank cut interest rates by about 25 basis points last June, and is almost certain to ease them again by about 25 basis points in September thanks to the recent slowdown in price growth.
However, policy decisions at subsequent meetings are likely to be more complicated as the eurozone economy enters a more precarious state, as indicated by talks with more than a dozen sources within the ECB.
US Interest Interest • According to CME Group’s FeedWatch: The pricing of the probabilities of a US interest rate cut of about 50 basis points at the September meeting is currently stable at 41%, and the pricing of the possibilities of a cut by about 25 basis points at 59%.
In order to reprice those possibilities, investors await the release of several important data on the US labor market throughout this week.
Today, Wednesday, job opportunities are released at the end of July, and Thursday issued US private sector jobs and weekly jobless claims, and Friday released the jobs report for the month of August.The interest rate gap between Europe and the United States is currently at 125 basis points in favor of US interest rates.In light of the current prospects around European and American interest rates, it is expected that this gap will continue without any change during this September, but may shrink to 100 basis points if the The Federal Reserve rates interest rates by about 50 basis points.
Therefore, if the US labor market data is worse than market expectations, the odds of cutting US interest rates will rise by about 50 basis points, which will support the appreciation of the EURUSD.
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