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The dollar underwent a short lower access on Friday, in the wake of the publication of a report on August employment which surprised the trade in the extent of the slowdown.
The content of this NFP (non -Farm Payrolls) only confirms the (very) slight deterioration in private employment health across the Atlantic. In detail, this federal report for the whole month of August highlights a slight increase in the unemployment rate, to 4.3% of the active population, in the target defined by consensus. Target also reached for the average increase in hourly wages (+0.3%). On the other hand – and it is there that the rub -, the creations of posts in the private sector excluding agriculture, expected to decrease at 75,000, in fact point to 22,000.
What even confirm the scenario of a drop of 25 basic points of the remuneration of Fed Funds At the end of the FOMC on September 17. It is certainly a source of relief, largely anticipated it is true, for the equity markets, but it is also a first sign of slowing down the American economic machine, hitherto launched at full speed. Especially since operators have a still crying for visibility on customs duties.
“This employment report corroborates the thesis of a strong slowdown in the labor market and certain members of the FOMC (the Monetary Policy Committee, Editor’s note), of which Christopher Waller, will now request a drop in rate of 50 basis during the September 17 Committee. The annual revisions published on September 9 could make it possible to decide between a drop in the Fed of 25 and a decrease of 50 points,” Strategy and economic studies at CPRAM.
New, the Fedwatch tool of the CMEGROUP even suggests the possibility of a drop in the remuneration of the Fed Funds of the order of 50 base points, with a significant probability of 9.9%. As a reminder, the tool makes it possible to assess in real time the probabilities of evolution of federal rates and the American monetary policy according to the price of term contracts on federal funds at 30 days.
On this side of the Atlantic, it is clear that the euro shows resistance even though it is today that François Bayrou will address the national representation, at the end of which a vote of trust will be organized. A vote that seems lost in advance for the Palois, admitting him himself with our colleagues in Brut.
Christopher Dembik, investment strategy advisor at Pictet AM, sheds light on this relative lack of reaction on foreign exchange, even though this vote risks ringing the end of a budget project marked by 44 billion euros in savings.
“During the session of August 27, which followed the announcement of the vote of trust, the EUR/USD pair only fell 0.06%. Why this lack of reaction from the markets? The French political setbacks are not new and, above all, they do not cause financial contagion to the rest of the euro zone. Right or wrongly, investors consider that France is” too big to fail “. The ECB will intervene by buying temporarily and on the sly of our debt – as it did in December 2024 after the Barnier government fell. “
Friday, the Fitch agency will return its verdict on the sovereign note of France. On March 14, the famous and influential rating agency gave an “AA-” with a negative perspective to our country.
“The rates of French bonds (OAT at 10 years) are under pressure, treated at levels similar to those of Greece and Italy, around 3.50 %. The deviations with these countries are now insignificant, suggesting that investors consider the OAT as equivalent to sovereign debts of lower quality, although France benefits from an aa- compared to BBB and BBB- Italy and Greece, which can suggest a gap of rating agencies in their evaluation, “observes Andrea Tueni, responsible for market activities at Saxo Banque.
At midday on the foreign exchange market, the euro was treated against $ 1,1730 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.
The News Bulletin 247 Council
Daily data graphics
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