EUR/USD: major meeting on American employment tomorrow

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The euro / dollar stabilized on what becomes the center of gravity of a thin rage, around $ 1,1640 while bond tensions reflected a notch, especially in France.

“The French Prime Minister will submit on September 8 to a vote of confidence on his project to reduce the budget deficit, which hovers the threat of a fall in the government. The political crisis looming maintains the loan costs of France at a high level (the latter have come closer to those of Italy). The risk of a degradation of the sovereign note increased and the decision of Fitch, expected on September 12 Recalls and warns César Perez Ruiz, investment manager and CIO at Pictet Wealth Management.

It is indeed on Monday that the suspense – far from being unbearable it is true – on the future of the Bayrou government – will end. Concretely, it is the 2026 budget, including savings of 44 billion euros, which goes to the basket. And what has tense the bond markets, and until certain actions on Euronext Paris.

“Before Monday’s confidence vote, this Thursday’s long -term debt issue is to follow this Thursday on Thursday from the France Trésor agency. The volume announced by the agency is between 9.5 and 11 billion euros on 2035, 2042 and 2056 deadlines. A way to measure the appetite of investors for French debt in this sensitive political and budgetary context”, warned Alexandre Baradez (IG France). This auction is now validated.

The Agency France Trésor, responsible for raising the debt on the markets to finance the needs of the State, succeeded in a global auction of 7.3 billion euros in bonds at 10 years on Thursday. Investors’ demand has remained high, despite the political and budgetary context. This successful test has the virtue of eating tensions on French debt. The yield of tricolor bonds at 10 years old, fell to 3.493% against 3.54% Wednesday evening, and the one at 30 also fell to 4.39% against 4.45% the day before.

In addition to the Atlantic, the upheavals on the bond markets, of another nature, are to be linked with fears about the independence of the Fed.

“On the other side of the Atlantic, the showdown between Donald Trump and the Fed continues, while the pressure around Lisa Cook increases. In the event of the dismissal of the latter, Donald Trump will have appointed more than half of the members of the Fed governors in 6 months, more questioning the independence of the American Central Bank” Management Cross-Asset Auris Gestion.

“The recent inflation figures nevertheless give reason to the American president, with the inflation PCE published on Friday which emerged in accordance with expectations at +2.6% over a year. Conversely, the pressure on employment figures increases, with the publication of employment creations this Friday and while the previous publication will have cost its post to the president of the Bureau of Labor Statistics. At +3.3%, the economy needs a new support factor while the IA theme seems to run out of steam, as shown by the results of Nvidia (-2.14%), with levels of valuations of the American markets which become difficult. “

On employment precisely, it is tomorrow Friday that the traditionally very followed will be published NFP (non -Farm Payrolls) report for the month of August.

“The report on non-agricultural employment in the United States will provide an idea of ​​the potential magnitude of the drop in Fed rates this year. Its president, Jerome Powell, said that the labor market is now primarily on inflation in central bank decisions,” commented César Perez Ruiz, investment manager and CIO at Pictet Wealth Management.

Economists interviewed expect a slight increase in unemployment on an average of 4.3% of the active population, and 74,000 net of positions. Let us also recall that, published at the end of the weekend, the PCE prices, the favorite measure of the Fed in its appreciation of the price dynamics have not reserved a big surprise. Over a year, the increase in the “Core” index, that is to say excluding food and energy prices, has registered 2.9%, online with the expectations of economists interviewed by the Wall Street Journal.

On this subject, the American federal reserve reported on Wednesday evening in its “Beige Book”, its beige book, which some “companies hesitated to hire due to a lower demand or uncertainty”. This maintains the hope that the Fed adjusts its guiding rates after its next meeting scheduled for this month.

At the macroeconomic agenda this Thursday, to follow in priority the survey of the HR CDP cabinet at 2:15 p.m., weekly registrations for unemployment benefits at 2:30 p.m. and the ISM activity barometer at 4:00 p.m., for as many American indicators.

At midday, the euro was treated against $ 1,1640 approximately.

Key graphics elements

The pair of Euro / dollar currencies is in the marked ascending phase, background, above an oblique right that makes sense. We have represented this linear level of graphic support in black. In the immediate future, we will keep an eye attentive to the relative positioning of the mobile averages at 20 (in dark blue) and 50 days (in orange) to optimize the entry points.

Medium term

In view of the key graphic factors that we have mentioned, our opinion is neutral in the medium term on Euro dollar parity (Eurusd).

We will keep this neutral opinion as long as the EURO Dollar (EURUSD) prices are positioned between the USD 1,1608 support and the resistance to 1,1835 USD.

Daily data graphics