Dollar Continues its Decline Ahead of Latest Employment Data
GBP
GBP/USD is currently trading at 1.2754 (interbank), while GBP/EUR stands at 1.2059 (interbank).
This morning, the Halifax House Price Index revealed a 4.8% annual rise in November, the highest in two years, up from October’s 4% and exceeding expectations of 3.6%. Monthly prices rose by 1.3%, reaching an average property price of £298,083, with easing mortgage rates boosting buyer confidence, though affordability challenges persist.
The Pound has gained momentum as BoE officials highlighted concerns over inflationary pressures. Monetary Policy Committee member Megan Greene warned that inflation could remain persistently above the 2% target due to robust wage growth, which she noted is “not falling as quickly as desired.” BoE Governor Andrew Bailey echoed this sentiment, asserting that the disinflation process is progressing but not yet complete.
Today’s events (GMT):
07:00 - Halifax House Price Index (Nov) – Actual: 4.8% vs Forecast: 3.6%
EUR
EUR/USD is trading at 1.0574 (interbank), rebounding from its two-year low of 1.0331.
The Eurozone’s Retail Sales grew by 1.9% year-on-year in October, slowing from September’s 3% growth but surpassing forecasts of 1.7%. However, monthly retail sales fell by 0.5%, missing the expected 0.3% decline.
Germany’s Industrial Production contracted by 1% month-on-month in October, against expectations for a 1.2% rise, and fell by 4.5% year-on-year, reflecting ongoing economic challenges. Meanwhile, French President Emmanuel Macron announced plans to appoint a new Prime Minister following Michel Barnier’s resignation, with the primary task of securing parliamentary approval for the 2025 budget.
The ECB is widely expected to lower interest rates at its meeting next week, with markets anticipating a 25-basis point cut.
Today’s events (GMT):
07:00 - German Industrial Production (Oct) – Actual: -1.0% vs Forecast: 1.0%
10:00 - GDP (Q3) – Actual: 0.9% vs Forecast: 0.6%
USD
The Dollar Index, which measures the U.S. dollar against a basket of six major currencies, has declined and is currently at 105.809.
Today, markets will closely monitor the release of the US Nonfarm Payrolls (NFP) data for November this afternoon. The report is expected to provide fresh insights into whether the Federal Reserve will cut interest rates at its policy meeting on 18 December.
Economists anticipate the US economy added 200,000 new jobs, a notable rebound from the 12,000-increase recorded in October. Last month's payroll growth was significantly lower as some industries were disrupted by hurricanes and labour strikes at Boeing plants. The Unemployment Rate is projected to have risen slightly to 4.2% from 4.1%.
Investors will also keep a close eye on Average Hourly Earnings data, a key indicator of wage growth, which is forecast to have increased by 3.9% year-on-year, compared to 4% in October.
The Fed began its policy-easing cycle in September, citing concerns about weakening labour demand while expressing confidence that inflation would return to the bank’s 2% target. Currently, there is a 72% probability that the Fed will lower interest rates by 25 basis points (bps) to 4.25%-4.50% this month, with the remainder of the market expecting rates to remain unchanged, according to the CME FedWatch tool.
Today’s events (GMT):
13:30 - Average Hourly Earnings (Nov) – Forecast: 4.0%
13:30 - Nonfarm Payrolls (Nov) – Forecast: 202K
13:30 - Unemployment Rate (Nov) – Forecast: 4.2%
15:00 - Michigan Consumer Sentiment (Dec) – Forecast: 73.1
18:00 - FOMC Member Daly Speaks
14:15 - FOMC Member Bowman Speaks
CAD
USD/CAD is currently trading at 1.4037 (interbank) ahead of employment data releases from both sides of the border, which are expected to shape market expectations for interest rate cuts.
The Canadian dollar is anticipated to recover only a small portion of its recent losses over the next year, as the threat of U.S. trade tariffs continues to weigh on the outlook for Canada's export-reliant economy.
Today, Canada will publish its latest employment figures, with economists forecasting a jobs increase of 25,000.
The Bank of Canada is expected to maintain its easing cycle at its policy meeting next Wednesday, with markets pricing in nearly a 50% chance of another significant 50 basis point (bps) rate cut.
Meanwhile, oil prices have edged lower, with Brent crude currently at $71.74 per barrel and West Texas Intermediate (WTI) trading at $67.98 per barrel.
Today’s events (GMT):
13:30 - Employment Change (Nov) – Forecast: 25.0K
13:30 - Unemployment Rate (Nov) – Forecast: 6.6%
15:00 - Ivey PMI (Nov) – Forecast: 53.1
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