## United States
The dollar presented a mixed outlook as the week began with significant events on the horizon. The spotlight is shifting to the labor market, highlighted by today’s ADP employment estimates and culminating with the nonfarm payroll report on Friday. Meanwhile, Fed Chair Powell is scheduled to discuss economic developments at a New York Times event. Recent job openings data showed a 5% increase in October, representing the largest rise since mid-last year. Benchmark 10-year Treasury yields increased nearly three basis points to 4.25%, marking a third consecutive session of gains. This matches the longest upward streak since September.
Today’s economic calendar is full but not all data carry equal weight. The ADP private sector job estimate garners significant attention. Although over the last three months the ADP estimate has been considerably higher than the Bureau of Labor Statistics’ figures, over the last ten months the differences have been narrowed. Bloomberg’s surveys anticipate that the ADP estimate will slow from 233k in October to 158k. Friday’s nonfarm payroll report is expected to display a robust recovery in private sector employment with an anticipated gain of 200k, bouncing back from a 28k loss in October, the first such drop since the end of 2020. The Fed’s Beige Book will also be a highlight, with potential implications for future monetary policy.
## Eurozone
In Europe, all eyes are glued to the French parliament as it faces a crucial confidence vote. Should the current government fall, President Macron might appoint a new prime minister or maintain the current one in a caretaker capacity, averting an existential crisis. A day before the vote, the French 10-year bond yield premium over Germany has narrowed. Final November PMI data was released, with France’s figures presenting a slight improvement over initial readings. However, Italy’s manufacturing and services sectors showed marked declines, with both indices hitting new lows for the year. In contrast, Spain maintained its robustness among the major economies, despite slight PMI slowdowns.
The euro remained in a state of consolidation around the $1.05 level, showing only minor fluctuations. The sterling is showing signs of potential improvement, outpacing the euro in technical terms. Sterling’s recent high is waiting just shy of the 50% retracement level of losses endured since the US elections.
## United Kingdom
The UK released its final November services and composite PMI data, slightly elevating initial estimates. The Services PMI stood at 50.8, while the composite was recorded at 50.5, indicating a slowdown compared to October. The sterling displayed an inside day pattern yesterday, indicating potential technical resilience. The currency appears positioned to move positively in the short-term, as its moving averages demonstrate a forthcoming bullish crossover.
## China
China’s Caixin services and composite figures noted a rise, with the latter reaching 52.3, the highest since June. The official non-manufacturing PMI slipped to 50.0 from 50.2, while the composite PMI remained flat at 50.8. Even though the People’s Bank of China is permitting some depreciation in the yuan, measures are still being taken to mitigate its slide. The dollar briefly fell below CNH7.2835 as of the latest update.
## Japan
In Japan, the yen weakened significantly, suffering a drop of 0.75%. Political developments in the country added fuel to the yen’s volatility, as the head of the opposition party stepped down temporarily due to personal scandals, dampening expectations for a Bank of Japan rate hike this month. The dollar hit JPY150.80 against the yen, with resistance seen closer to JPY151.50.
## Canada
In Canada, the dollar remained within Monday’s trading range, displaying slight upward momentum. Despite this, the dollar has not settled below CAD1.40 for more than a week, implying unrelenting upward risk. The swaps market is interpreting a 50% likelihood of a half-point rate cut by the Bank of Canada next week. Canada also reported Q3 productivity data, which remains a point of concern, as productivity has been declining consistently since mid-2020, with only a few quarterly upturns.
## Australia
Australia’s economic landscape saw its Q3 GDP edge up to 0.3% quarter-on-quarter from 0.2% in Q2. Australian PMIs were revised higher, barely surpassing the 50 level, which demarcates expansion from contraction. The Reserve Bank of Australia’s meeting on December 10 remains pivotal amid heightened market expectations for a rate cut in April, with these odds now fully priced in.
## Mexico
Mexico’s data presented mixed signals; September’s private consumption growth of 1% fell below expectations, yet October’s unemployment rate dropped sharply to 2.50%, the lowest since March. The dollar exhibited range-bound trading against the Mexican peso. The exchange rate between MXN20.29 and MXN20.43 reflects restrained activity over recent weeks.
