Euro dips after US jobs data

The euro is off versus the US dollar this lunchtime, after the US posted strong jobless claims figures.

EUR/USD is trading at $1.3229, down 0.2%, on news that there has been a drop of 13,000 in the number of people claiming unemployment benefit in the US. Analysts were expecting the figure to remain unchanged. This also means that the number of claimants has fallen to the lowest level since October 2007. In addition, the US inflation rate climbed by 0.2% in July compared with June, in line with expectations. Some economists were worried that inflation might rise at a faster rate because of the quantitative easing (QE) programme, but this has not been the case.

The Fed has been stating for months that it will reduce its QE scheme when unemployment falls. The most recent report showed us that US unemployment is now at 7.4%, and today’s jobless claims figure is nearly at a six-year low. Consequently, dealers sold the euro and bought the US dollar, as they felt the Fed might taper its bond-buying scheme as early as next month. Today’s jobless claims report could be a sign of what is to come from the US.

Spot FX EUR/USD chart

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.