Forex News
- EUR/USD falls to a two-month low after US payrolls beat expectations.
- The US economy added 172K jobs in May, while April payrolls were revised sharply higher.
- Slowing Eurozone economic growth raises stagflation concerns ahead of the ECB monetary policy meeting on June 11.
EUR/USD weakens on Friday as the US Dollar (USD) rallies following a stronger-than-expected US Nonfarm Payrolls (NFP) report. At the time of writing, the pair trades around 1.1559, slipping to two-month lows.
Data released by the US Bureau of Labor Statistics showed the economy added 172K jobs in May, well above the market consensus of 85K. April's payroll figures were revised higher to 179K from 115K, while the Unemployment Rate held steady at 4.3%.
In response to the data, the US Dollar Index (DXY) climbed to its highest level since April 7. The index, which tracks the Greenback's value against a basket of six major currencies, trades around 99.80 after rebounding from an intraday low of 99.16 touched earlier in the European session.
The stronger-than-expected labor market data reinforced expectations that the Federal Reserve (Fed) could maintain a restrictive policy stance as officials assess rising inflation risks linked to higher Oil prices. According to the CME FedWatch Tool, traders expect the US central bank to keep rates in the 3.50%-3.75% range over the coming months, while pricing in a 42% chance of a 25-basis-point (bps) rate hike by the December meeting.
The hawkish repricing is also pushing US Treasury yields higher, providing additional support for the Greenback. The benchmark 10-year US Treasury yield jumps 8 basis points (bps) to 4.53% on Friday.
In the Eurozone, traders are nearly certain that the European Central Bank (ECB) will raise interest rates at next week's meeting as policymakers seek to contain inflationary pressures stemming from elevated Oil prices.
However, recent GDP data suggests economic growth is slowing across the bloc. With Europe heavily reliant on imported energy, the ECB may face a difficult trade-off between fighting inflation and supporting growth as stagflation risks build.
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
Kristian Nummelin at Nordea expects the European Central Bank to hike rates next week as elevated inflation and strong core momentum keep price pressures in focus. Markets are pricing a similar outcome. Nordea’s baseline remains four ECB hikes in total, taking rates to 3%, though a weaker growth outlook could shorten the cycle, with surveys soft but hard data still holding up better.
Inflation keeps ECB on track
"While the Fed is well positioned to stay on hold in the coming meetings, the ECB faces greater urgency."
"The latest inflation figures did not offer good news for the ECB, and although we do not yet know all the details, monthly core inflation momentum was quite strong."
"There is still uncertainty about how much higher energy prices will spill over into broader inflation, but PMIs and other surveys suggest that price pressures are visible in the service sector."
"With current inflation numbers, the ECB is set to hike rates next week (Thursday), and markets are pricing in the same outcome."
"Our baseline remains four ECB hikes in total although a weaker growth outlook could ultimately result in a shorter hiking cycle."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
TD Securities’ Global Strategy Team expects the ECB to raise the deposit rate to 2.25% in response to persistently high energy prices. They argue this move is aimed at reinforcing the ECB’s inflation-fighting credibility and anchoring expectations, while policymakers maintain a data-dependent, meeting-by-meeting stance and preserve flexibility for future decisions based on updated projections.
ECB seen hiking to 2.25%
"We expect the ECB to raise its deposit rate to 2.25% amid persistently high energy prices."
"While this hike aims to reinforce the credibility of the ECB's commitment to its inflation target and manage inflation expectations, the ECB is likely to continue to emphasise a data-dependent, meeting-by-meeting approach, with recent messaging shifting towards consensus for action but maintaining flexibility for future decisions based on updated projections."
"Euro area Q1 GDP was revised down to -0.2% q/q (from 0.1% preliminary release). The biggest culprit was the Irish GDP revision from the preliminary figure of -2.0% q/q to a record drop of -12.1% q/q. However, this was driven largely by the volatile multinational sector, which is likely to be reversed in the next quarter."
"As a result, this negative euro area GDP revision will likely be looked through by the ECB at their meeting next week as it doesn't accurately represent fundamentals in the region."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
ING notes US natural gas futures have firmed on supportive storage data and recovering LNG export flows after maintenance. However, Warren Patterson and Ewa Manthey judge the medium- to long-term Henry Hub outlook as less constructive than before the Iran war, as increased oil drilling is expected to boost associated gas output and keep the US market relatively well supplied through 2027.
Henry Hub pressured by supply
"US natural gas futures moved higher over the latter part of this week, with the latest storage data from the EIA providing a further boost. US natural gas storage increased by 95bcf last week, below the 99bcf increase expected and also lower than the 5-year average increase of 101bcf."
"Gas flows to LNG export plants have been picking up following seasonal maintenance, supporting prices. In the medium- to long-term, the outlook for Henry Hub is less constructive than it was pre-Iran war."
"Increased drilling activity on the oil side will lead to higher associated natural gas production, leaving the US natural gas market relatively better supplied through 2027."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- The US Dollar strengthens after US job creation significantly exceeds expectations.
- The US labor market remains resilient despite slower wage growth.
- The Reserve Bank of Australia's hawkish stance helps limit downside pressure on the Australian Dollar.
AUD/USD trades around 0.7105 at the time of writing on Friday, down 0.39% on the day, as the US Dollar (USD) gains support following a stronger-than-expected US employment report.
The Bureau of Labor Statistics reported that Nonfarm Payrolls (NFP) increased by 172K in May, following an upwardly revised gain of 179K in April. The market had expected only 85K new jobs. Meanwhile, the Unemployment Rate held steady at 4.3%, while annual wage growth, as measured by Average Hourly Earnings, eased to 3.4% from 3.6% previously.
This combination of a resilient labor market and moderating wage pressures supports the US Dollar (USD), as markets adjusted their expectations toward a more hawkish Federal Reserve (Fed) outlook. According to the CME FedWatch tool, traders currently assign a 41.2% chance to a 25-basis-point rate increase in December, while the odds of rates remaining unchanged stand at 41.6%. The US Dollar Index (DXY) advanced in the immediate aftermath of the release and recovered toward 99.55 at the time of press.
In Australia, the domestic backdrop remains mixed. Analysts at BNY note that the Reserve Bank of Australia (RBA) remains concerned about persistent inflationary pressures, driven by tight labor market conditions and energy-related risks. This environment is encouraging the central bank to maintain a restrictive policy stance despite signs of slowing economic growth.
Recent Gross Domestic Product (GDP) figures disappointed investors and triggered a correction in the Australian Dollar (AUD). Nevertheless, RBA Governor Michele Bullock reiterated this week that bringing inflation under control remains the central bank’s top priority, adding that the Board stands ready to take whatever action is necessary to achieve its mandate of price stability and full employment.
Australian Dollar Price Today
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.13% | 0.05% | 0.02% | -0.12% | 0.39% | 0.37% | 0.31% | |
| EUR | -0.13% | -0.09% | -0.09% | -0.25% | 0.26% | 0.21% | 0.19% | |
| GBP | -0.05% | 0.09% | -0.02% | -0.18% | 0.34% | 0.31% | 0.27% | |
| JPY | -0.02% | 0.09% | 0.02% | -0.14% | 0.36% | 0.33% | 0.28% | |
| CAD | 0.12% | 0.25% | 0.18% | 0.14% | 0.51% | 0.48% | 0.43% | |
| AUD | -0.39% | -0.26% | -0.34% | -0.36% | -0.51% | -0.02% | -0.10% | |
| NZD | -0.37% | -0.21% | -0.31% | -0.33% | -0.48% | 0.02% | -0.06% | |
| CHF | -0.31% | -0.19% | -0.27% | -0.28% | -0.43% | 0.10% | 0.06% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
Commerzbank’s Thu Lan Nguyen reports that US Aluminium supply remains tight more than a year after tariffs, with a planned Oklahoma smelter blocked on environmental and ownership grounds. Domestic production has actually fallen, while high prices and import premiums damp demand. The bank warns that market balance may come mainly via demand destruction rather than new capacity.
Tariffs fail to spur domestic capacity
"Even more than a year after the introduction of US import tariffs on aluminium, there is little sign of relief in the supply situation in the United States."
"As a result, a significant expansion of production capacity in the US still appears to be a long time coming. Last year, according to the USGS, aluminium production in the US actually declined, despite the tariffs."
"This applies to both primary and secondary production, although imports of aluminium scrap (which is exempt from the tariffs) increased significantly."
"This is likely also related to weaker demand, which was dampened by high prices. Given the persistently high import premiums, there is a significant risk that the strained US market will be relieved primarily by demand destruction."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- US Nonfarm Payrolls beat expectations by a wide margin in May, with 172K jobs added.
- The US Dollar rebounds after the release, helping USD/JPY recover from its intraday lows.
- Warnings from Japanese authorities continue to limit upside potential near the 160.00 threshold.
USD/JPY trades around 160.00 on Friday at the time of writing, virtually unchanged on the day after rebounding from its intraday lows following the release of the US employment report.
The Bureau of Labor Statistics (BLS) reported that US Nonfarm Payrolls (NFP) increased by 172K in May, following an upwardly revised gain of 179K in April. The figure significantly exceeded market expectations of 85K. Meanwhile, the Unemployment Rate remained steady at 4.3%, while annual wage growth slowed to 3.4% from 3.6% previously.
The report also showed upward revisions to previous months’ data. Payroll gains in March and April were revised higher by a combined 93K jobs, highlighting the continued resilience of the US labor market.
The market reaction was immediate. The US Dollar (USD) strengthened against most major currencies after the release as investors strengthened expectations for Federal Reserve (Fed) monetary tightening this year. According to the CME FedWatch tool, investors now see a 41.2% chance of a 25-basis-point interest rate hike in December, while the likelihood of rates remaining unchanged stands at 41.6%.
The Greenback’s recovery helped USD/JPY rebound after earlier weakness during the day. However, the pair’s gains remain limited as the Japanese Yen (JPY) continues to draw support from expectations of further monetary tightening by the Bank of Japan (BoJ). Data released in Japan earlier on Friday showed wage growth accelerating to 3.5% YoY in April, reinforcing expectations of another rate hike at the BoJ’s June 16 meeting.
In addition, Japanese authorities continue to maintain strong verbal pressure on the foreign exchange market. Japanese Finance Minister Satsuki Katayama reiterated on Friday that the government stands ready to take “decisive action” against excessive JPY volatility. Several analysts, including those at DBS and BNY, now view the 160.00 level as a potential trigger point for another round of foreign exchange intervention.
As a result, despite support from stronger-than-expected NFP data and a rebound in the US Dollar, USD/JPY remains in a highly sensitive area where the risk of official Japanese intervention could limit any sustained move above the 160.00 mark.
Japanese Yen Price Today
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.13% | 0.08% | 0.08% | -0.16% | 0.36% | 0.32% | 0.32% | |
| EUR | -0.13% | -0.07% | -0.07% | -0.29% | 0.22% | 0.16% | 0.20% | |
| GBP | -0.08% | 0.07% | -0.02% | -0.24% | 0.27% | 0.23% | 0.25% | |
| JPY | -0.08% | 0.07% | 0.02% | -0.23% | 0.29% | 0.23% | 0.25% | |
| CAD | 0.16% | 0.29% | 0.24% | 0.23% | 0.51% | 0.47% | 0.48% | |
| AUD | -0.36% | -0.22% | -0.27% | -0.29% | -0.51% | -0.05% | -0.05% | |
| NZD | -0.32% | -0.16% | -0.23% | -0.23% | -0.47% | 0.05% | 0.01% | |
| CHF | -0.32% | -0.20% | -0.25% | -0.25% | -0.48% | 0.05% | -0.01% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
- EUR/GBP trades lower on Friday as Eurozone growth concerns weigh on the Euro.
- ECB faces a tougher policy trade-off as stagflation risks build.
- Markets are fully pricing in a 25 bps ECB rate hike at the June 11 policy meeting.
The Euro (EUR) slips against the British Pound (GBP) on Friday after a downward revision to Eurozone growth figures cast fresh doubt over the region's economic outlook. EUR/GBP trades around 0.8642 at the time of writing, pulling back after two days of gains.
Gross Domestic Product (GDP) fell 0.2% from the previous quarter, reversing the earlier estimate of 0.1% growth. The annual growth rate was revised down to 0.3% from 0.8%, slowing from 1.2% in the final quarter of 2025.
The weaker growth figures come as the Eurozone continues to grapple with higher energy costs following months of disruption to shipping through the Strait of Hormuz.
As a major importer of energy, the bloc has been particularly exposed to the surge in Oil prices triggered by tensions in the Middle East. Inflation has already accelerated above the European Central Bank’s (ECB) 2% target, and the latest GDP figures suggest the economic fallout is now becoming visible in growth data as well, raising the risk of stagflation.
That leaves the ECB facing a difficult balancing act. Markets are fully pricing in a rate increase at next week's policy meeting and expect at least two additional rate hikes before the end of the year.
However, signs of slowing growth alongside rising inflation are likely to complicate the policy outlook and could make it harder for the central bank to pursue an aggressive tightening cycle.
"A 25bp risk-dependent, pre-emptive, insurance hike is widely expected from the ECB next week despite rising concerns over the near-term growth outlook. The experience from the 2021-22 supply shock clearly runs deep as a faster response this time is preferred despite a lack of key wage data," Societe Generale economist Anatoli Annenkov said.
"While there is room for modest rate hikes without entering restrictive territory, the ECB is likely to insist on data-dependency going forward. It should also be open about the trade-offs of early action, especially as a strong adverse growth impact could hold back the wage reaction and even call for a policy reversal," he added.
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.09% | 0.02% | 0.03% | -0.20% | 0.23% | 0.23% | 0.27% | |
| EUR | -0.09% | -0.09% | -0.06% | -0.29% | 0.13% | 0.11% | 0.19% | |
| GBP | -0.02% | 0.09% | 0.02% | -0.22% | 0.21% | 0.20% | 0.26% | |
| JPY | -0.03% | 0.06% | -0.02% | -0.23% | 0.19% | 0.18% | 0.23% | |
| CAD | 0.20% | 0.29% | 0.22% | 0.23% | 0.43% | 0.42% | 0.47% | |
| AUD | -0.23% | -0.13% | -0.21% | -0.19% | -0.43% | -0.00% | 0.03% | |
| NZD | -0.23% | -0.11% | -0.20% | -0.18% | -0.42% | 0.00% | 0.05% | |
| CHF | -0.27% | -0.19% | -0.26% | -0.23% | -0.47% | -0.03% | -0.05% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
Bob Savage at BNY notes that the Reserve Bank of India kept the repo rate at 5.25% and a neutral stance, while unveiling measures to support the Rupee and attract foreign capital. Authorities raised inflation and cut growth forecasts, and see potential USD 40–60 billion in inflows from tax exemptions and incentives for foreign bond investors and non‑resident Dollar deposits.
Policy steady with FX‑support tilt
"India’s central bank kept the policy repo rate unchanged at 5.25% and retained its neutral policy stance, citing heightened uncertainty from the Iran conflict and a deteriorating global environment."
"Alongside the decision, the government and RBI unveiled measures to support the rupee and attract foreign capital, including removing capital gains and interest taxes for foreign investors in government bonds, improving incentives for non-resident dollar deposits, and offering concessional foreign exchange swaps for overseas borrowing."
"Policymakers raised their inflation forecast for the current fiscal year to 5.1% from 4.6% and cut GDP growth expectations to 6.6% from 6.9%, reflecting higher oil prices and weaker external conditions."
"Authorities estimate the new measures could attract USD 40bn to 60bn in inflows and help offset pressure from capital outflows and a weaker currency."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
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