EUR/USD: Euro Jumps 1.3% for Best Day since November. US Jobs Data Was a Big Letdown

Euro found new momentum after dollar tumbled following dire nonfarm payrolls data. July jobs arrived well below expectations.

• The EURUSD shot sharply higher Friday and remained well-bid Monday morning after traders emptied their pockets of dollars and flocked to alternative forex players. The European currency added a solid 1.3% gain to log its best trading session since November. The euro-dollar exchange rate crossed $1.09 to a Friday session high of $1.0926, erasing losses accumulated over the past couple of weeks. Monday deals kicked it up to $1.0970.
• Jobs data, weak and disappointing jobs data, shook the US dollar out of its dominance. The nonfarm payrolls for July — new jobs added to the economy — arrived at 114,000, badly undershooting estimates of 174,000 new hires. The data fanned worries about a flailing US economy, which is sitting on interest rates at a 23-year high, making it relatively difficult for the labor market to sustain an upward trajectory.
• To this end, markets now eye a heavier cut of 50 basis points to interest rates, up from 25 basis points, when the Federal Reserve meets in September. Lower rates generally weigh on the local currency as they translate to lower yields. Investors tend to shun low-yielding currencies in favor of assets that carry a higher probability of returns, albeit they can be riskier.