Investing.com - The euro pulled back from 14-month lows against the dollar on Friday after data showed that the rate of U.S. job creation slowed in August, indicating that interest rates will remain on hold at record lows for longer.
The Labor Department reported that that U.S. economy added 142,000 jobs last month, disappointing expectations for jobs growth of 225,000. July’s figure was revised up to 212,000.
The unemployment rate ticked down to 6.1% from 6.2% in July.
The report eased concerns that the recovery in the U.S. economy is progressing so rapidly that the Federal Reserve will be forced to raise rates sooner prevent the economy from overheating.
EUR/USD hit session highs of 1.2988 following the release of the jobs report, but then retraced most of those gains to settle at 1.2951, trading 0.05% higher late Friday.
The dollar remained supported after other economic reports earlier in the week indicated that the U.S. recovery is still on track. Data on Tuesday showed that the country’s manufacturing sector expanded at the fastest rate in more than three years in August.
The Fed is expected to wind up its asset purchase program in October and to start raising interest rates sometime in mid-2015. In contrast, the European Central Bank looks likely to stick to a looser monetary policy stance.
The pair fell 1.6% on Thursday; the largest one day drop in almost three years after the ECB cut rates to record lows and announced fresh stimulus measures in an attempt to shore up slowing growth and inflation in the region.
ECB President Mario Draghi said the decision came after long term inflation expectations deteriorated in August.
The ECB cut its forecast for growth this year to 0.9% down from 1.0% previously and cut the forecast for 2015 to 1.6% from 1.7%
The bank also lowered its inflation forecast for this year to 0.6% from 0.7% in June but left its 2015 inflation forecast unchanged at 1.1%.
In the week ahead, investors will be looking ahead to Friday’s U.S. data on retail sales and consumer sentiment for further indications on the strength of the economic recovery.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets. The guide skips Tuesday and Wednesday as there are no relevant events on these days.
Monday, September 8
In the euro zone, Germany is to release a report on the trade balance.
Thursday, September 11
The U.S. is to produce the weekly report on initial jobless claims.
Friday, September 12
The euro zone is to release data on industrial production.
The U.S. is to release data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity. The U.S. is also to release what will be closely watched preliminary data on consumer sentiment.