EUR/USD has posted slight losses in the Friday session. Currently, the pair is trading at 1.1494, down -0.18% on the day. On the release front, German data was positive. Factory Orders jumped 2.0% in August, rebounding from a 0.9% decline in July. German PPI edged up from 0.2% to 0.3% in September. In the U.S, the focus will be on key employment data, with the markets braced for some soft numbers. Nonfarm payrolls is expected to fall from 201 thousand to 185 thousand, while wage growth is forecast to drop from 0.4% to 0.3%. The unemployment rate is expected to drop from 3.9% to 3.8%.
All eyes will be on U.S job numbers on Friday, which should be treated as market-movers. Nonfarm payrolls have shown an average increase of 207,000 in 2018, and the September forecast of 185,000 would be significantly softer. Investors will also be monitoring the increase in wage growth. The August release showed a year-over-year gain of 2.9%, and a similar reading for September could bolster the odds of December rate hike. Currently, the likelihood of a December rise is pegged at 80%, according to the CME Group.
Fed Chair Jerome Powell had a hawkish message for the markets on Wednesday. Powell said that interest rates were still accommodative, but were “gradually moving to a place where they will be neutral”. Powell said that extremely accommodative low interest rates were no longer needed, since the economy has strengthened. The hawkish comments helped push the U.S dollar higher on Wednesday. Analysts have noted that there is no precise definition of a neutral rate, but the Fed tends to use the 3 percent level as its yardstick. With the Fed expected to continue its gradual increase in rates, this level could be reached in 2019.
