US Jobs & Eurozone Inflation to Shape Dec Outlook.
Summary:
Post-Holiday Return: Liquidity returns to normal as US markets fully reopen after Thanksgiving, shifting focus to the year-end policy outlook.
US Labour Market Test: Friday's Non-Farm Payrolls report serves as the definitive input for the Federal Reserve’s December meeting.
Eurozone Inflation: Tuesday's Flash CPI data will be pivotal in determining whether the ECB accelerates its easing pace.
As trading desks reach full capacity following the US Thanksgiving break, the foreign exchange market turns its attention to the final major data cycle of the year. With central bank meetings looming in mid-December, this week serves as the last significant opportunity for economic data to alter policy expectations. The spotlight falls firmly on the US labour market and Eurozone price pressures to set the tone for the month.
Sterling enters December with a lighter domestic schedule. Monday's Money and Credit figures and Tuesday’s Financial Stability Report from the Bank of England offer some local interest, but are unlikely to drive significant volatility. Consequently, the Pound is expected to trade primarily as a function of global risk sentiment and the US Dollar’s trajectory, particularly as investors position for the BoE's decision later in the month.
The Greenback faces a rigorous examination of economic resilience. The week begins with the ISM Manufacturing PMI on Monday, followed by the Services gauge on Wednesday, providing a broad health check on the economy. However, the narrative will ultimately be defined by Friday’s Non-Farm Payrolls report. A solid jobs print would likely cement expectations for a "soft landing," reinforcing the Dollar's yield advantage.
The single currency faces an immediate test with the release of the Eurozone Flash CPI on Tuesday. As the final inflation reading before the ECB’s December gathering, the data will be instrumental for investors managing currency risk. A downside surprise in core inflation could bolster arguments for a more aggressive rate cut, potentially weighing on the Euro against its major peers.
Events to Watch This Week:
Monday, December 1: US ISM Manufacturing PMI
Tuesday, December 2: Eurozone Flash CPI Inflation & US JOLTS Job Openings
Wednesday, December 3: US ISM Services PMI & ADP Employment Change
Friday, December 5: US Non-Farm Payrolls (NFP)
This week marks the transition into the final trading stretch of 2025. With liquidity restored and high-impact data on the docket, the potential for volatility is elevated as the market finalises its positions ahead of the pivotal central bank decisions in mid-December.
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