Tina Fey Tackles the Wild World of EUR/USD and Fed Decisions!

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Ladies and gentlemen, let’s get real. The EUR/USD pair hit rock bottom at 1.1391 on the first day of August, its lowest point in over a month. The US Dollar (USD) somehow managed to stand tall, defying all market sentiments and keeping its positive momentum through a week filled with more drama than a high school cafeteria.

But guess what? On Friday, the USD finally decided to take a breather after some pretty disappointing US data. The pair ended up settling at around 1.1550, still holding onto some serious weekly losses. 🤦‍♂️

Trade War: The Never-Ending Soap Opera

The US and the European Union (EU) reached a trade deal that’s like a bad romance novel. A 15% tariff for most US exports, and a 50% levy on EU exports to the US for steel, aluminum, and copper. Romantic, right? 🥰

European Commission President Ursula von der Leyen said these levies are subject to reciprocal tariffs, but she didn’t give us the juicy details we all crave. Meanwhile, European leaders are not exactly thrilled. German Chancellor Friedrich called it “considerable damage,” and French Prime Minister François Bayrou labeled it “a dark day” for the EU. Ouch! 💔

Mid-week, US President Donald Trump, the king of dramatic announcements, slapped a 50% levy on all Brazilian imports. Because why not add a little spice to the trade war? 🌶️

The White House also announced a universal 50% tariff on imports of semi-finished copper products and copper-intensive derivatives. Because why have just one flavor when you can have a whole buffet? 🍗

And just when you thought it couldn’t get any more exciting, the August 1 deadline arrived, bringing fresh tariffs. Trump agreed to a 90-day extension with Mexico for more negotiations but hit Canada with a 35% tariff. Because why not keep your neighbors guessing? 🤷‍♀️

Stock markets, sensing the chaos, decided to take a nosedive ahead of the weekly close. The market’s concerns about the global economic impact were valid, but hey, at least it’s entertaining! 😂

Federal Reserve: The Plot Twists Continue

Mid-week, the Federal Reserve (Fed) made a decision that was as predictable as a sitcom plot. They kept the benchmark interest rate unchanged, floating between 4.25% and 4.50%. But here’s the twist: two dissenters, Governors Christopher Waller and Michelle Bowman, voted to reduce borrowing costs. Drama! 🎭

Chair Jerome Powell, the calm in the storm, explained that the decision was due to the persistent uncertainty surrounding the tariffs’ impact on inflation. He also noted that with inflation still above the Fed’s 2% goal and the labor market tight, they should keep rates where they are. Powell wants to be ready to act if needed, but for now, it’s a waiting game. 🕵️‍♂️

Powell didn’t hint at a rate cut in September, preferring to maintain his “wait-and-see” stance. Of course, this triggered another tantrum from President Trump, who has been demanding lower rates. Trump took to social media to call Powell “Too Late” and claimed his decision costs billions. Because nothing says “mature” like a tweet-storm. 📱🔥

Data-packed Week: The Final Showdown

European data showed that the Old Continent is finally coming out of the woods, thanks to the European Central Bank’s (ECB) massive interest rate reduction. Germany’s preliminary Q2 GDP showed a 0.1% contraction, and the July HICP rose at an annualized pace of 1.8%. Retail Sales were up 4.9%, almost double the previous 2.6% advance. 📊

The EU flash Q2 GDP posted a 0.4% quarterly gain, better than the 0.2% expected, and the annual advance was 1.4%, beating estimates of 1.2%. However, the HICP held at 2% YoY in July, and the core annual reading remained unchanged at 2.3%. So, it’s a mixed bag, folks. 🍒 orangetext

The US calendar was packed with employment-related data, culminating in the Nonfarm Payrolls (NFP) report. The Q2 GDP showed the US economy grew at an annualized rate of 3%, much better than the 0.5% decline from the first quarter and better than the 2.4% expected. This boosted demand for the USD, which was further fueled by a hawkish Fed. 💪

The JOLTS report showed 7.43 million job openings in June, below expectations, but the ADP Employment Change report was more encouraging, showing 104,000 new job positions in July. The Challenger Job Cuts showed 62,075 job cuts in July, the second-highest for a July in a decade. 🚨

NFP: The Shock Heard ‘Round the World

The NFP report finally dropped, and it was a doozy. The country added only 73,000 new positions in July, with June’s reading revised to 14,000 from 147,000. Revisions showed roughly 260,000 fewer job positions than previously estimated. The Unemployment Rate rose to 4.2%, and the Labor Force Participation Rate ticked down to 62.2%. Annual wage inflation, however, rose to 3.9%. 📉

The news sent the US Dollar into a sell-off, and market players now believe there’s a 66% chance of a rate cut at the upcoming Fed meeting. The July ISM Manufacturing PMI unexpectedly contracted to 48, and the Michigan Consumer Sentiment Index was revised to 61.7. Stocks retained substantial tariff-inspired losses, reflecting ongoing concerns. 📉

By the end of the week, the Fed might hold back its fire again in September. The upcoming days will have little to offer in terms of macroeconomic figures, but the trade war will likely retake center stage. Stay tuned for more drama! 🎬

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2025-08-05 21:05