Nasdaq climbs to record after softer jobs data cools rate-hike expectations
The Nasdaq Composite's new intraday record was propelled by softer U.S. jobs data, which appears to ease the looming pressure on the Federal Reserve to raise interest rates in the near term. This development signals a potential reprieve for equities as the market absorbs the implications of a less aggressive monetary policy, which could influence currency flows as traders adjust their expectations. As the Fed weighs its options, this economic data could lessen the USD's appeal, especially against currency pairs sensitive to interest rate differentials.
Where it sits in our coverage
Our consensus EUR/USD target sits at 1.075 (median across 8 firms), with Goldman at the upper bound (1.12) and BofA at the lower (1.04). This sentiment aligns with the current market environment as softer U.S. economic data shifts rate-hike expectations.
How firms align
JPMorgan's forecast reflects this narrative, pegging the EUR/USD at 1.10, suggesting they view the potential for further USD weakness as realistic given the latest economic signals. In contrast, BofA suggests a more cautious approach, maintaining a target of 1.04, which reflects concerns around Eurozone challenges.
What the data shows
The recent job numbers have prompted analysts to revise outlooks on potential rate adjustments. This shift is captured in our updated Insight, signaling a watchful stance surrounding U.S. employment figures and their broader economic implications.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01Nasdaq hits record as job data tempers Fed rate hike fears.
- 02Softer U.S. jobs data likely to pressures USD, supporting EUR strength.
- 03Watch for EUR/USD approaching 1.075 as Fed shifts tone post-data.
Market implications
Next, traders should monitor the upcoming employment reports as a signal for USD volatility and potential shifts in the EUR/USD. The key level to observe is 1.075, aligning with our consensus, which has implications for positioning around Fed decisions.
Risks to this view
Should subsequent job reports indicate stronger-than-expected hiring or wage growth, this would challenge the current narrative and could trigger a stronger USD. Any rhetoric from the Fed hinting at an earlier rate hike could lead to a significant reversal in current trends.
Sentiment by currency
USD EUR~JPY+GBP~Composite USD score: -0.65
Sources & References
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