The dollar is correcting after Friday’s rally following strong October employment data, which exceeded the forecasts discussed in our previous market review. Unemployment declined from 4.2% to 4.1%, while nonfarm payrolls increased by 165,000, beating expectations of 65,000 and September’s revised gain of 60,000. Monthly growth in average hourly earnings accelerated from 0.3% to 0.4%. Labour-market resilience gives the Federal Reserve more room to address inflation, which remains above its 2.0% target. Published CME FedWatch readings showed the probability of a December rate increase rising from around 66% earlier last week to approximately 77% following Friday’s report. San Francisco Fed President Mary Daly also said further tightening would likely be necessary. St. Louis Fed President Alberto Musalem highlighted businesses’ concerns about inflation, describing it as a regressive tax that needed to be reduced.
Eurozone
The euro is strengthening against the yen and the US dollar but weakening against sterling.
German trade figures released today showed that exports increased by 2.0% month on month in September, exceeding forecasts of 0.5%, while imports rose by 4.2% against expectations of 0.5%. The trade surplus consequently narrowed from a revised €17.9 billion to €15.6 billion. Analysts expect foreign trade to support Germany’s economic recovery without becoming its main driver. Meanwhile, the eurozone Sentix Investor Confidence Index declined from 2.7 to 2.4 in November, compared with forecasts of 2.1. The result points to continued economic stagnation amid pressure from high energy costs, interest rates, and political uncertainty.
United Kingdom
Sterling is strengthening against the euro, the yen, and the US dollar.
The October KPMG and Recruitment and Employment Confederation survey showed weaker hiring alongside faster growth in starting salaries for permanent roles. The Permanent Placements Index fell from 50.9 to 46.6 points, its lowest reading since May, as concerns about the economic outlook and rising costs made employers more cautious. The Temporary Billings Index declined from 50.9 to 48.9. These are survey indices, with readings below 50 indicating contraction. Permanent vacancies fell at their slowest pace since August 2024, while demand for temporary workers increased marginally.
Japan
The yen is weakening against the euro and sterling but strengthening against the US dollar.
Investors are assessing recent comments by Bank of Japan Governor Kazuo Ueda at an International Monetary Fund event. He said underlying inflation was expected to remain near the 2.0% target, although upside risks persisted. Ueda described wage growth as consistent with 2.0% inflation and warned that higher energy prices could push consumer inflation upward into early next year. He also said the BoJ was closely monitoring other central banks because their decisions affect asset prices, exchange rates, and interest rates. Given Japan’s significant labour shortages, he suggested that replacing some labour with artificial intelligence could benefit the economy.
Australia
The Australian dollar is strengthening against the yen and the US dollar but trading mixed against the euro and sterling.
September building approvals figures showed a 5.1% monthly increase in total dwelling approvals following a 5.2% decline. Private-sector house approvals fell by 5.3% after rising by 5.4%. Meanwhile, Reserve Bank of Australia Assistant Governor (Economic) Sarah Hunter said in a speech on Monday that there was limited evidence of AI materially boosting aggregate productivity or significantly reducing overall employment so far.
Oil
Oil prices are correcting lower today.
Prices remain under pressure after President Donald Trump told CNN that renewed military action against Iran was highly unlikely if peace negotiations made progress. However, he did not rule out strikes against Iranian infrastructure if necessary. Additional pressure comes from JPMorgan Chase & Co.’s latest assessment, which suggests that recovering Middle Eastern exports, rising production elsewhere, and weaker global demand have returned the oil market to surplus. The bank estimated excess supply at 1.1 million barrels per day in September and 1.4 million barrels per day in October.
