Forex Today: Dollar Loses Strength, Euro and Pound Rise, Oil Under Pressure

The focus for forex investors is the August labor market report, which confirmed weakness: unemployment moved from 4.2% to 4.3%, and employment growth slowed sharply from 79.0K to 22.0K versus forecasts of 75.0K. Healthcare led with 31.0K new jobs, while social assistance lagged with –16.0K. Average hourly earnings stayed at 0.3% m/m and slowed from 3.9% to 3.7% y/y. Following the release, the probability of a 25bps Fed rate cut on September 17 increased. Traders also monitor the White House tariff case: President Donald Trump’s lawyers filed an appeal to the US Supreme Court to validate tariffs. Trump warned that if the ruling goes against the administration, the US will cancel trade deals with the EU, Japan, and South Korea.

Eurozone

The euro is strengthening against the yen, pound, and dollar.

Eurozone GDP for Q2 slowed from 0.6% to 0.1% q/q, holding at 1.5% y/y versus forecasts of 1.4%. The figures confirm slow recovery despite global trade tensions, supporting the ECB’s cautious stance. In Germany, factory orders fell 2.9% in July versus expectations of +0.5%. Declines in equipment and transport orders have now lasted three months, both foreign (–3.1%) and domestic (–2.5%). Economy minister Katarina Reiche stressed the urgent need to improve competitiveness

United Kingdom

The pound is gaining against the dollar but weakening against the euro and yen.

July retail sales rose from 0.3% to 0.6% m/m and from 0.9% to 1.1% y/y, missing expectations of 1.3%. Households remain resilient despite inflation risks and higher taxes in the new budget. The Halifax housing index slipped from 0.4% to 0.3% m/m and from 2.5% to 2.2% y/y, slightly above the 2.0% forecast. Analysts expect gradual recovery in the housing sector through year-end.

Japan

The yen is rising against the dollar and pound but weaker versus the euro.

Household spending surged from –5.2% to 1.7% m/m and from 3.1% to 4.1% y/y, beating forecasts of 3.0%. The figures support inflationary pressure and raise the chance of BoJ tightening. Meanwhile, President Trump signed a US–Japan trade deal, imposing a 15.0% tariff on all Japanese exports, with sector-specific measures for autos, aerospace, generic drugs, and natural resources not produced in the US.

Australia

The Australian dollar is strengthening against the dollar, euro, pound, and yen.

Support came from RBA Governor Michele Bullock, who highlighted stronger-than-expected household consumption that pushed Q2 GDP growth to 0.6%. Rising real incomes and housing prices are fueling demand, and if the trend continues, the RBA may refrain from further rate cuts.

Oil

Oil prices are under pressure from weaker US labor data and inventory reports.

Higher unemployment and slower job growth raise concerns about US demand for energy. EIA data showed crude inventories rose by 2.415M barrels versus forecasts of –2.000M. Distillates increased by 1.681M, while gasoline stocks fell by –3.795M barrels.