The euro weakened back below $1.16 as stronger-than-expected US employment data boosted the dollar and reinforced expectations for tighter Federal Reserve policy. US nonfarm payrolls increased by 162,000 in August, significantly surpassing market expectations for a 56,000 gain and prompting markets to price in a near 58% probability of a Fed rate hike this month. Attention is now gradually shifting toward the European Central Bank’s September 10 policy meeting. Money markets continue to fully price in a 25-basis-point ECB rate hike to 2.5% next week, while assigning an almost 100% probability that the deposit rate will reach 3% by June 2027. Such pricing implies two additional rate increases by mid-2027. On the economic data front, Germany’s factory orders rose 2.5% in July, slowing from an upwardly revised 3.7% increase in June but comfortably exceeding market expectations for a 0.3% gain.