EUR/USD: Downward Trend Continues
The euro starts the week with losses. The euro/dollar is trading at 1.1477, having lost another 0.39% on the day. While US stock markets are open for trade on Monday, bond markets will remain closed in observance of Columbus Day.
Investor confidence in the Eurozone weakened in October, mainly due to uncertainties about the position of fiscal policy in Italy and the automotive industry in Germany. Data from think tank Sentix showed, that the investor sentiment index fell to 11.4 in October from 12.0 in September. The expected reading was 11.8. Meanwhile, the current situation index came in at 33.0, the lowest since April 2017, and down from 35.0 in September. The expectations indicator rose to -8.3 from -8.8 in the previous month.
The US labor market remains strong, despite mixed data for September. Nonfarm payrolls dropped sharply to 134 thousand, its smallest gain in a year. The unemployment rate fell to 3.7% from 3.9% in August, which is the lowest since December 1969. Meanwhile, wages increased by 0.3% compared to August and by 2.8% in annual terms.
The mixed US numbers slightly reduced the chances of a December hike, which dipped to 76% after the job releases, down from 80% prior to the releases. A December rate hike would be the fourth this year, with the Fed expected to raise rates another three times in 2019.