EUR/USD: Euro Rises After US Jobs Report Boosts Odds of Rate Cut in December

November’s nonfarm payrolls indicated that a cut to interest rates was still on the cars for December. And that toppled the dollar’s rise.

• The EURUSD pair opened weekly trading muted and largely moving sideways. Monday morning saw the major forex pair slipping from its closing level of $1.0566 on Friday to tread water near $1.0540 as currency speculators were getting their coffee and preparing to step into the day with new vigor after Friday’s big news. The nonfarm payrolls report for November showed the US economy was in good shape.
• America’s employers added a solid 227,000 new hires to the workforce, blowing past estimates of 202,000. The figure suggests that October’s dire job growth of just 12,000 (revised to 36,000) was actually weighed down by one-off events and that’s not going to turn into a trend. The dollar’s initial reaction was to sell off on the news as investors realized what is most likely to happen in mid-December.
• On December 17-18, the Federal Reserve gets to meet up one final time before calling it a year and signing off to celebrate Christmas and pop some bottles for the new year. And with that final employment report before the big event (the rate decision), the US central bank has one more reason to cut interest rates. Expectations of a casual 25-basis-point cut jumped to more than 90%. The prospects of lower rates generally knock the local currency’s valuation as it stands to yield less on deposits.