Market focus turns to key US jobs data as investors assess the outlook for the dollar, interest rates and global FX markets. With central bank expectations finely balanced, today’s data could set the tone for near-term volatility.
Key Insight:
- US job numbers in focus as traders brace for potential dollar volatility
Market Recap:
The US dollar eased as markets adopted a cautious stance ahead of the highly anticipated US employment data, compounded by more accommodative-leaning remarks from Fed official Miran. In contrast, the euro gained ground against the weaker dollar, supported by speculation that the European Central Bank could consider a rate increase in 2026. Sterling underperformed, however, after disappointing UK GDP figures at the end of last week strengthened expectations that the Bank of England may deliver an interest rate cut at its upcoming meeting.
Today's Market Watch:
UK labour market data released this morning points to easing wage pressures and a softening jobs backdrop. Private sector pay growth moderated to 3.9% over the three months to October, slightly above expectations but still broadly aligned with the Bank of England’s longer-term projections of 3.5% for 4Q25. On an annualised basis, wage growth slowed to 2.6%, consistent with the central bank’s 2% inflation target, while a decline of 38,000 payroll jobs in November suggests the employment market is losing momentum. As a result, markets remain confident the BoE will cut rates this Thursday, along with a 40% chance of seeing two additional cuts in 2026.
Attention now turns to the US, where today’s November NFP report is the key risk event. This release offers one of the clearest signals of labour market conditions post-shutdown, with payroll growth forecast to cool sharply to around 50k and unemployment expected to hold steady at 4.5%. A weaker-than-expected outcome would reinforce expectations that the Federal Reserve could deliver additional rate cuts. October US retail sales data is also due, with flat growth anticipated, adding to evidence that consumer spending is starting to slow.
Later in the day, December PMI surveys from the UK and euro area will provide further insight into economic momentum. The UK is expected to show a modest post-Budget improvement, while eurozone activity may reach its strongest level in over two years, although manufacturing conditions remains below 50— highlighting ongoing challenges in the industrial sector.
16th December 2025
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