The latest employment data from the US has revealed a sharper-than-anticipated slowdown in job growth for June, accompanied by downward revisions for the preceding two months. This suggests businesses remain cautious about the economic outlook and has prompted markets to scale back expectations for Federal Reserve interest rate hikes.

The US non-farm payrolls report for June showed an increase of only 57,000 jobs, significantly lower than the market forecast of 110,000. Furthermore, the data for April was revised down from 179,000 to 148,000, and May's figures were adjusted from 172,000 to 129,000. Combined, the revisions for April and May lowered the total by 74,000 jobs compared to previous estimates. Some analysts view the June slowdown as a natural correction following three consecutive months of robust job gains, rather than a sign of a fundamental shift in labor market conditions. This adjustment may also bring the non-farm payrolls data more in line with other labor market surveys, such as those tracking small business hiring plans.

San Francisco Federal Reserve President Mary Daly commented that, despite expectations for a gradual decline in inflation, significant uncertainty remains regarding the economic outlook. Should inflation persist above expectations, the Fed may need to adopt a more aggressive policy stance. Speaking at an event in Santander, Spain on Thursday, Daly noted that current monetary policy is at a "slightly restrictive" level, which should help guide inflation lower. She pointed out that the US military action against Iran earlier this spring, along with rising tariffs and oil prices, contributed to inflationary pressures. However, the subsequent ceasefire agreement between the US and Iran and the notable retreat in international oil prices provide a positive signal for easing inflation. "The decline in oil prices gives us hope for alleviating inflationary pressures," she stated. Nevertheless, she emphasized that the future trajectory of the US economy remains difficult to predict, and the Fed must be prepared for various scenarios.

Key data to watch today includes the final readings for the UK June SPGI Services PMI, the Eurozone June SPGI Composite PMI, and the UK June SPGI Services PMI.

US Dollar Index

The US Dollar Index declined yesterday, breaking below the 101.00 level and touching a fresh two-week low. It is currently trading around 100.80. The drop was driven partly by profit-taking, but the primary catalyst was the much weaker-than-expected US non-farm payrolls report, which dampened expectations for Fed rate hikes. The data showed the US added only 57,000 jobs in June, far below the forecast of 110,000. Market focus now shifts to resistance near 101.50, with support seen around 100.50.

EUR/USD

The Euro moved higher yesterday, closing with modest gains. It is currently trading around 1.1440. Support stemmed from short-covering activity, coupled with the US dollar's weakness as the disappointing jobs report pushed the Dollar Index below 101.00. Additionally, positive economic data released from the Eurozone during the session provided further support. Resistance is now eyed near 1.1550, while support lies around 1.1350.

GBP/USD

The British Pound also advanced yesterday, ending the session slightly higher and currently trading near 1.3360. The continued easing of political uncertainty in the UK provided underlying support. The main driver, however, was the broad-based US dollar weakness following the soft jobs data, which cooled Fed rate hike expectations. Resistance is anticipated near 1.3450, with support located around 1.3250.