- EUR/USD has corrected gradually to near 1.0600 amid an improvement in safe-haven’s appeal.
- Fed President Neel Kashkari see the interest rate peak around 5.4%.
- Eurozone inflation might trace to a sheer drop in German HICP led by falling energy prices.
The EUR/USD pair witnessed selling pressure after failing to surpass the crucial resistance of 1.0630. The major currency pair has slipped to near the round-level support of 1.0600 as the risk appetite of the market participants has trimmed. S&P500 futures have surrendered half of their Wednesday’s recovery as anxiety among market participants is accelerating ahead of the United States Nonfarm Payrolls (NFP) data.
S&P500 futures have sensed sheer heat in the Asian session as the extent of deviation in the US employment data will have a meaningful impact on the viewpoint of Federal Reserve (Fed) policymakers toward the policy outlook for CY2023. Also, the market sentiment has turned risk averse as Minneapolis Fed President Neel Kashkari sees interest rate peak around 5.4%.
Considering the market consensus, the United States economy generated fresh 200K jobs in December against 263K reported for the previous month. While the Unemployment Rate is expected to remain steady at 3.7%. Investors are worried that the upbeat labor market could compel the Fed to continue keeping interest rates higher for a secular period. Firms would be forced to offer higher wages to hire talent, which could propel retail demand and fire-up inflation again.
The US Dollar index (DXY) has recovered its entire losses and has scaled to near 104.00. Also, the 10-year US Treasury yields have scrolled above 3.71%.
Meanwhile, Eurozone investors are awaiting the release of the Harmonized Index of Consumer Prices (HICP), which is scheduled for Friday. As per the consensus, the headline HICP is likely to drop to 9.7% vs. the prior release of 10.1%. This week, German HICP dropped vigorously to 9.7% led by falling energy prices. A decline in the price index might force the European Central Bank (ECB) to slowdown their policy tightening pace as the road to 2% inflation is far from over.