US Job Number Diminishes Interest Rate Cut Expectations from the Federal Reserve

Daily Currency Update

USD - United States DollarExpectations of an interest rate cut in the U.S. later this month were diminished last week by a surprisingly strong job report that showed the U.S. economy added 224k jobs in June (versus +160k expected). May saw a figure of only 72k jobs added, which had led to the cemented view that there would be a July rate cut from the Fed. Last Friday’s numbers have added doubt to that view and futures markets now show that traders see a 70 percent chance of a rate cut in July, down from 90 percent. The Euro is clinging onto its recent upward trend amid a fresh attack from U.S President Trump, who accused Europe (and China) of playing a “big currency manipulation game” in a Twitter post. European Central Bank Governing Councilmember Francois Villeroy de Galhau rejected the accusations, and said that the ECB’s role is to maintain price stability and not to set foreign-exchange levels. Trump has made it very clear that he wants a weaker dollar to help boost domestic exports. He's pushing the Federal Reserve to help make that happen, despite Central Bank Chairman Jerome Powell made it clear that it’s not his job.