The focus of investors and forex traders is on the November US labor market report. Unemployment rose from 4.4% to 4.6%, slightly above the 4.5% forecast. Employment increased by 64,000 after a decline of 105,000 in the previous month, while average hourly earnings accelerated from 0.2% to 0.4%. October retail sales data were also released today, showing a flat reading of 0.0%, whereas most analysts had expected a 0.1% increase.

The labor market has shown further signs of cooling, while overall economic momentum appears to be slowing. This provides additional arguments for supporters of further monetary easing by the US Federal Reserve. In this context, recent comments from Fed officials are worth noting. Boston Fed President Susan Collins said that the balance of risks has shifted somewhat and that scenarios involving a sharp resurgence of inflation now look less likely, which allowed her to vote in favor of a rate cut at the latest meeting. Meanwhile, New York Fed President John Williams stated that the recent rate adjustment was the right step and leaves the central bank well positioned to address economic challenges, with growth expected to resume next year.

Eurozone

The euro is gaining against the US dollar, weakening versus the pound, and showing mixed performance against the yen.

Preliminary December business activity data were released today. The eurozone services PMI fell from 53.6 to 52.6, below the 53.3 forecast. The manufacturing PMI declined from 49.6 to 49.2, versus expectations of 49.9, while the composite index dropped from 52.8 to 51.9, compared with a forecast of 52.7. Similar data from Germany also showed weaker activity: services fell from 53.1 to 52.6, manufacturing from 48.3 to 47.7, and the composite index from 52.4 to 51.5. The eurozone economy continues to grow, but at a more moderate pace than previously expected.

At the same time, overall business sentiment remains relatively positive, supported by the services sector, which is offsetting weakness in manufacturing. The industrial sector remains under pressure from higher US trade tariffs and a decline in new orders. December economic sentiment data from the ZEW institute were also published today: the eurozone index jumped from 25.0 to 33.7, well above the 26.3 forecast, while the German index rose from 38.5 to 45.8.

United Kingdom

The British pound is strengthening against its major peers — the US dollar, the euro and the Japanese yen.

Investor attention is centered on October labor market data. The unemployment rate edged up from 5.0% to 5.1%, the highest level since early 2021. Employment declined for a second consecutive month, falling by another 16,000. Wage growth including bonuses slowed from 4.9% to 4.7%, compared with a 4.4% forecast, while earnings excluding bonuses eased from 4.7% to 4.6% versus expectations of 4.5%. Analysts note that the labor market came under pressure ahead of the presentation of the state budget, as businesses were reluctant to hire amid concerns over higher taxes. Preliminary December PMI data were also released today: the services index rose from 51.3 to 52.1, manufacturing climbed from 50.2 to 51.2, and the composite index increased from 51.2 to 52.1.

Japan

The Japanese yen is strengthening against the US dollar, weakening versus the pound, and showing mixed dynamics against the euro.

Preliminary December business activity data were published today. The manufacturing PMI rose from 48.7 to 49.7, exceeding expectations of 49.0 and approaching expansion territory. The services PMI declined from 53.2 to 52.5, while the composite index fell from 52.0 to 51.5. Japan’s manufacturing sector, particularly the automotive industry, remains under pressure due to reduced exports to the US amid higher trade tariffs.

Australia

The Australian dollar is losing ground against the euro, the pound and the yen, while showing mixed performance against the US dollar.

Preliminary December business activity figures were released today. The manufacturing PMI improved from 51.6 to 52.6, while the services index dropped from 52.8 to 51.0. The composite PMI declined from 52.6 to 51.1. Meanwhile, a report from Westpac showed consumer sentiment falling by 9.0% to 94.5 after a 12.8% surge in the previous month. The index slipped back below the 100 mark, signaling prevailing pessimism. Analysts point out that consumers remain concerned about high inflation and the prospect of continued tight monetary policy from the Reserve Bank of Australia.

Oil

Oil prices are declining amid expectations of progress toward a settlement of the Russia–Ukraine conflict.

During consultations held yesterday, representatives from Washington, Brussels and Kyiv reportedly agreed on additional peace initiatives that are now expected to be presented to the Kremlin. If a compromise is reached, some sanctions on Russia’s oil sector could be partially lifted, increasing global crude supply. Price pressure is also being reinforced by weak US labor market data for November, which point to a continued slowdown in the world’s largest economy. Later today, at 11:30 PM GMT+2, the American Petroleum Institute (API) will publish its weekly inventory report. The previous release showed a drawdown of 4.8 million barrels, and a continuation of this trend could provide some support for prices.