Incoming statistics are increasing uncertainty over the Federal Reserve’s next steps. Some experts believe that the sharp rise in unemployment revives the case for continuing the dovish cycle early next year and even suggest a 50-basis-point rate cut. Others argue that, given the positive employment trend—averaging about 75.0 thousand over the past three months—policymakers may adopt a wait-and-see approach. In this context, Atlanta Fed President Raphael Bostic said yesterday that further rate cuts could accelerate both economic growth and inflation, while the current cooling of the labor market does not yet require an adjustment to monetary policy.

Eurozone

The euro is strengthening against the pound and the yen but weakening against the US dollar.

Final inflation data for the euro area were released today: in November, the consumer price index remained at 2.1% year-on-year versus expectations of 2.2%, while the core indicator held at 2.4%, in line with forecasts. These levels are close to the European Central Bank’s target, increasing the likelihood that the current monetary policy stance will be maintained for an extended period. In addition, Germany’s IFO business climate index fell from 88.0 to 87.6 in December versus expectations of 88.2. The current conditions index was unchanged at 85.6 instead of rising to 85.7, while the expectations index declined from 90.5 to 89.7. Analysts point to disappointment among German investors over insufficient government stimulus and forecast a weak economic recovery next year.

United Kingdom

The pound is weakening against the US dollar, the euro, and the yen.

Investors are focused on inflation data: in November, the consumer price index fell from 0.4% to –0.2% month-on-month versus expectations of 0.0%, and from 3.6% to 3.2% year-on-year against a forecast of 3.5%. Analysts note that the decline was driven by Black Friday discounts as well as a sharp drop in confectionery and tobacco prices. The data have pushed the probability of a Bank of England rate cut at tomorrow’s meeting from 4.00% to 3.75% to nearly 100%. In addition, analysts expect several stages of monetary easing over the course of next year

Japan

The yen is strengthening against the pound but weakening against the euro and the US dollar.

In November, exports rose by 6.1% versus expectations of 4.8%, while imports increased by 1.3% against 2.5%. As a result, the trade balance surplus reached 322.2 billion yen. Analysts highlight the recovery in Japanese exports to the US—up 8.8% year-on-year—as a particularly positive signal for the economy, with car shipments rising by 1.5% and pharmaceutical exports more than doubling. In addition, core machinery orders in October accelerated from 4.2% to 7.0% month-on-month and from 11.6% to 12.5% year-on-year, increasing the likelihood of a rate hike by the Bank of Japan.

Australia

The Australian dollar is weakening against the US currency but strengthening against the pound, the euro, and the yen.

Today, the Australian government released updated economic forecasts showing that inflation in the current fiscal year (through June 2026) may reach 3.75% rather than the previously expected 3.00%. Nominal GDP growth expectations were also raised to 5.25%, which would boost tax revenues by AUD 15.0 billion. However, the positive outlook was offset by a AUD 9.1 billion increase in external payments, leaving the budget deficit only slightly smaller than expected at AUD 36.8 billion. Officials also highlighted the risk of persistently elevated inflation, particularly in the services sector.

Oil

Oil prices are rising amid escalating tensions between the United States and Venezuela. Yesterday, US President Donald Trump ordered the blockade of all sanctioned oil tankers entering or leaving Venezuela. As a result, analysts believe the country’s crude exports could decline significantly, although much will depend on how strictly the restrictions are enforced.

In addition, prices are being supported by fuel inventory data from the American Petroleum Institute (API), which showed a drawdown of 9.3 million barrels. At 17:30 (GMT+2), a similar report from the US Energy Information Administration (EIA) is due; forecasts suggest inventories will fall by 2.4 million barrels, providing further support to prices.