EUR/USD has edged lower in the Monday session. Currently, the pair is trading at 1.1306, down 0.24% on the day. German banks are closed for Whit Day. On the release front, there are no German or eurozone events. In the U.S., the sole event is JOLTS Job Openings, which is expected to tick up 7.50 million.
The euro enjoyed an outstanding week, with gains of 1.5%. This marked the strongest weekly gain since August. The currency posted considerable gains on Friday, after a dismal nonfarm payrolls report for May. The economy created only 75 thousand jobs, down from 263 thousand a month earlier. Wage growth was unchanged at 0.2%, shy of the estimate of 0.3%. Despite these soft job numbers, the U.S. economy remains in far better shape than the eurozone, so the last week’s spike could be short-lived.
The message from last week’s ECB policy meeting was dovish, yet the euro still managed to post gains. The ECB surprised the markets by revising its forward guidance, saying that it would not raise interest rates before the middle of 2020. Previously, the bank had said that it would not hike rates prior to the spring of 2020. The delay is a response to weak economic conditions in the eurozone, as the global trade war has taken a toll on manufacturing and exports in Germany and the rest of the bloc.
As expected, ECB President Draghi said that ECB will pay banks to borrow funds from the central bank, if the funds are passed on to consumers and small businesses. This is a stimulus measure with the aim of boosting spending in the private sector. The bank upwardly revised its 2019 outlooks for growth and inflation. In March, the ECB forecast GDP at 1.1% and inflation at 1.2% – these were revised to 1.2% and 1.3%, respectively.
