Jobs report in the US today
The euro fell to its low for the week to date against the dollar yesterday ahead of today’s jobs report in the US, trading down to circa $1.1640, which is more or less where it is stands this morning. Sterling continued to drift down against the US currency; at around $1.3420 it is now slightly below where it closed last Friday, having jumped to over $1.3550 at the start of this week. The pound is little changed from yesterday morning against the euro at about £0.8675, albeit off its strongest level for the week so far of just under £0.8650 reached on Tuesday. Regarding today’s jobs report, the consensus forecast is employment increased by 70k in December, after +64k in November, with the unemployment rate – probably the key metric for the Fed – expected to nudge down to 4.5% from November’s 4.6%.
The jobs report will shape expectations for Fed interest rate policy in the period ahead. Currently, the market sees about 50bps worth of cuts in 2026 with a full 25bps reduction priced in for Q2. Meanwhile, it was fairly uneventful once again in the main government bond markets. US yields were a little higher across the curve, while German and UK yields were flat to a touch lower respectively. Of note overnight, Donald Trump has said the federal housing agencies will buy $200bn of mortgage bonds (MBS) to help lower mortgage rates. In equity markets, the S&P 500 finished flat on the day while the Stoxx Europe 600 was marginally lower.
Economic sentiment in the Euro area fell slightly in December according to the European Commission’s Economic Sentiment Indicator, although still remaining close to its best levels of 2025, mainly due to softer consumer confidence. Separately, the unemployment rate dipped to 6.3% in November, staying in the 6.3% to 6.4% range that has prevailed since the end of 2024.
As mentioned, the US jobs report is the main economic data release today. Other US data due include the University of Michigan consumer confidence/inflation expectations survey for January and housing starts for October, while November retail sales are scheduled in the Euro area. Also today, the US Supreme Court may give its ruling on the legality of Trump’s tariffs imposed under the International Emergency Economic Powers Act (IEEPA).