- EUR/USD posts modest gains near 1.1665 in Thursday’s Asian session.
- Traders ramped up bets on Fed rate cuts after weaker US employment data for July.
- Eurozone Retail Sales improved to 3.1% YoY in June, stronger than expected.
The EUR/USD pair trades with mild gains around 1.1665 during the Asian trading hours on Thursday, bolstered by a weaker US Dollar (USD). The German June Industrial Production, Eurozone Economic Bulletin and US weekly Jobless Claims will be released later on Thursday.
The potential upside for the Greenback might be capped amid rising expectations of a Federal Reserve (Fed) rate cut and concerns over the US central bank’s independence. Traders will focus on the usual US Initial Jobless Claims, which are expected to rise to 221,000 for the week ended August 2. If the report shows a stronger-than-expected outcome, this could lift the USD against the NZD in the near term.
Fed funds futures traders ramped up bets on rate cuts after data last Friday showed US employment growth was weaker than expected in July. According to the CME FedWatch tool, Fed funds futures traders are now pricing in a 94% odds of a 25 basis point (bps) cut at the September meeting, up from 48% a week ago.
Traders will closely watch the developments surrounding Fed governor’s replacement. Trump said on Tuesday that he will decide on a short-term replacement for Fed Governor Adriana Kugler, who resigned last Friday. He will also soon reveal a nominee for the next Fed Chair. Trump ruled out US Treasury Secretary Scott Bessent as a candidate to succeed current Chairman Jerome Powell, whose term expires in May 2026.
Across the pond, Germany’s Factory Orders softened in June, while Retail Sales for the Eurozone improved in the twelve months to June data. Traders will keep an eye on the German June Industrial Production and Eurozone Economic Bulletin for fresh impetus.
