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EUR/USD: Dollar Strengthens Against Euro After Dismal October Jobs Data

Key points:

• Euro slides against dollar
• Pair tumbles 0.8% to $1.0820
• Jobs data shows sharp drop

The EUR/USD currency pair experienced a downward trend during the US trading session on Friday, reacting to the latest nonfarm payrolls report, which revealed a drastic slowdown in job creation. In October, the US economy added only 12,000 jobs, a sharp decline compared to the anticipated 112,000, prompting the euro to fall by 0.8% to approximately $1.0820, down from an earlier session high of $1.0906. This unexpected data has bolstered the US dollar, suggesting that the economy is struggling as we approach the upcoming election.

The surge in the dollar interrupted a four-day rally for the euro and reinstated the dollar's dominance across global markets. Additionally, the Japanese yen depreciated, crossing the ¥153 mark. Such a dismal hiring figure may pave the way for potential interest rate cuts by the Federal Reserve, aimed at easing economic pressures by making borrowing more affordable for consumers and businesses.

So, what factors contributed to this disappointing performance of the US labor market? A combination of hurricanes, severe storms, and labor strikes, including a notable strike at Boeing, led US employers to significantly reduce their hiring efforts. This month’s job gains represent the lowest net increase since December 2020, when the economy faced a significant setback due to the COVID-19 pandemic. Furthermore, the jobs data from September has been revised downwards, showing a net addition of 223,000 jobs instead of the previously reported 254,000.