The Euro (EUR) slipped against the US Dollar (USD) on Thursday, with EUR/USD giving back part of Wednesday’s gains and trading close to 1.1645 at the start of the US session. The decline comes as the Dollar found renewed strength on the back of mixed US labor market figures, while weaker-than-expected Eurozone Retail Sales added further pressure on the single currency.
The latest ADP Employment Report showed that US private payrolls grew by just 54,000 in August, falling short of forecasts for 65,000 and down sharply from July’s revised 106,000, signalling slower hiring. Weekly Initial Jobless Claims also rose slightly to 237,000 from 229,000, pointing to a modest uptick in layoffs. On a more positive note, Q2 Nonfarm Productivity was revised upward to 3.3% from 2.4%, while Unit Labour Costs eased to 1.0% versus 1.6% expected, hinting at reduced wage-driven inflation pressures.
The US Dollar Index (DXY), which measures the greenback’s performance against a basket of major currencies, edged higher to around 98.30, clawing back part of Wednesday’s decline. Still, the index remains trapped in the narrow range that has defined trading since early August, as investors await Friday’s Nonfarm Payrolls (NFP) for a stronger directional signal.
Meanwhile, Eurozone data painted a weaker picture for consumer demand. Retail Sales dropped 0.5% month-on-month in July, a sharper fall than the 0.2% forecast and reversing June’s 0.6% gain. Year-over-year sales growth slowed to 2.2%, below the expected 2.4% and sharply down from June’s 3.5%. The numbers underline fragile household spending, adding to concerns over the region’s growth prospects even as inflation stays slightly above the European Central Bank’s (ECB) 2% target.
Looking ahead, market focus shifts to US service-sector data due later today. S&P Global’s Composite and Services PMI for August are projected to remain steady at 55.4, pointing to continued expansion. The ISM Services PMI is expected to rise modestly to 51.0 from 50.1, with traders watching Employment, New Orders, and Prices Paid components for clues on demand trends and inflationary pressures in the service economy.
