Strong US data pushed euro down on Thursday. The recovery in the US private sector and decline in jobless claims were all signals of economic growth, which is very bullish to dollar and accordingly, dragging to euro.
Unfortunately, these recoveries also mean that US inflation will continue to rise, which is not good news to the economy. Despite that, the Federal Reserve is convinced that it is not yet the right time to adjust the monetary policy, especially the volume of bond purchases. "The economy has improved, but I think we are still very far from meeting the prerequisites for policy changes," New York Fed President John Williams said.
ADP reported that employment in the US private sector rose much more than expected, by 978,000 instead of the expected 650,000. It is the largest growth recorded since June 2020 and signals the strong recovery in the labor market. Employment in the service sector also increased by 850,000, while employment in the manufacturing sector climbed by 128,000.
As for the overall employment data for May, which will be released later today, economists expected a jump of as much as 664,000. Meanwhile, the unemployment rate is projected to drop to 5.9%.
And as mentioned earlier, all this led to the decline of euro in the market, pushing it near the base of the 21st figure. If the quote continues to drop below this range, euro will plunge to 1.2070 and 1.2020. But if the quote goes above 1.2135, euro will rise to 1.2160 and 1.2190.
Going back to US employment, jobless claims decreased last week, reaching only 385,000. This is significantly better than the record the previous week, and is lower than the expected 395,000.
Meanwhile, business activity in the service sector rose to 64.0 points, which indicates strong growth. Analysts expected the index to reach only 63.0 points.