Jobs report in the US today

The euro has regained some ground against the dollar and is now more than a cent off its early week lows ($1.0460) on Monday, trading at around $1.0580 this morning. It is also a touch former against sterling at just under £0.83, with the pound little changed against the dollar from yesterday morning at $1.2760 albeit up around half a cent from Monday’s lows. The US jobs report due later today is an important release, which could determine whether the euro and sterling can extend their recent gains against the dollar.

In government bond markets, US yields were largely unchanged yesterday, and are broadly flat on the week so far as well, while German and UK yields rose by around 5bps, with higher yields supporting the euro and the pound. In equity markets, European stocks closed higher for a sixth consecutive session, gaining almost 5% over this period, while in the US the S&P 500 retreated a little from Wednesday’s all-time high.

Euro area retail sales started off the fourth quarter on a soft note, with volumes falling by 0.5% in October after increasing in each of the previous three months. On an annual basis, sales were up 1.9% on October 2023, in line with the year-on-year growth in Q3.

Bank of England MPC member Greene says services inflation in the UK remains “stubbornly high” and wage growth is “coming down…but not as quickly as I would have liked”, suggesting she will continue to argue for a gradual approach to lowering interest rates.

Today’s jobs report in the US is expected to show the economy added 220k jobs in November, following a hurricanes and strikes impacted gain of just 12k in October, with the unemployment rate seen remaining at 4.1% and annual hourly earnings growth dipping to 3.9% from 4%. Other data due today include US consumer confidence and a final estimate of Q3 GDP growth in the Euro area.