EUROPEAN SESSION:
In the European session, we’ll get the Flash PMIs for the UK and the major Eurozone economies. The data is unlikely to change much for the respective central banks though.
In fact, the BoE is expected to cut by 25 bps bringing the Bank Rate to 3.75%. They will likely tread carefully from there on as the interest rate will be in their “quite broad” 2-4% neutral range. The market expects at least one more cut in 2026 after the one we get on Thursday.
On the ECB side, the central bank is expected to keep everything unchanged and not giving away too much in terms of forward guidance. Almost all ECB members have repeatedly said that the next move could be either way and that they won’t respond to small or short-term deviations from their 2% target.
AMERICAN SESSION:
In the American session, it goes without saying that all eyes will be on the US NFP report and nothing else will matter. In fact, despite having also the US Flash PMIs on the agenda, the market will highly likely trade based on the US jobs report.
The November Non-Farm Payrolls is expected at 50K vs 119K prior, while the Unemployment Rate is expected to remain unchanged at 4.4%. The Average Hourly Earnings Y/Y is expected at 3.6% vs 3.8% prior, while the M/M figure is seen at 0.3% vs 0.2% prior.
There’s been lots of talk that this report could be noisy as the data collection process was affected by the shutdown. Moreover, Fed Chair Powell said in the press conference that they think job gains have been overstated by 60K in recent months and that they think there’s a negative 20K in payrolls per month.
Therefore, the Unemployment Rate will probably be the most important metric to look at in terms of market reaction, but big deviations in payrolls will also catch market’s attention
