By Kian Songra
December has fast approached, and that brings with it the excitement of Christmas. Typically, the month of December sees the currency markets shift in dynamics with reduced trading volumes, lower liquidity, and seasonal factors. With this in mind, for those that may be holding on for the markets to make significant moves this month, those in the Christmas spirit may have to reconsider what’s on their wish list.
This week data from the US is likely to dominate the calendar. In contrast, the UK economic calendar lacks any high-impact data releases in the upcoming week. Apart from the data publication, risk sentiment will play a pivotal role in influencing the Pound as global trade war fears mount following US President-elect Donald Trump’s announcement of tariffs on Mexico, Canada, and China.
Today we see the European Central Bank (ECB) president Lagarde speak in a conference. She also addresses listeners for a second time this week on Wednesday. Political uncertainty in various countries, including Germany, France, and Austria, has been a key factor in the Euro’s weakness. Today’s further budget talks in France could sink or save the Euro. Marine Le Pen, leader of the far-right National Rally, wields significant influence in France’s divided parliament. According to Bloomberg, she has given Prime Minister Michel Barnier a deadline until Monday to meet her budget demands, threatening to bring down the government if he does not comply. This afternoon, the US Institute for Supply Management’s (ISM) and Manufacturing Purchasing Managers’ Index (PMI) will stand out following the releases of the S&P Global final UK and US Manufacturing PMI reports.
The US JOLTS Job Openings Survey will be the only vital data published on Tuesday. Wednesday will feature the US ADP Employment Change and ISM Services PMI data. Additionally, appearances from BoE Governor Andrew Bailey and Fed Chairman Jerome Powell. Comments from these speeches will be closely analysed by market participants for key insights into any future moves. Powell’s appearance will be his last public one before the Fed enters the ‘blackout period’ on December 7. The Aussies also release their GDP on Wednesday, so for those with requirements down under, may look to monitor this reading closely.
The usual weekly US Jobless Claims will be reported on Thursday, followed by BoE policymaker Megan Greene’s speech. All eyes will be on Friday’s critical US Non-Farm Payrolls (NFP) for fresh signs on labour market conditions and the Fed’s rate outlook. The NFP is a critical data release that measures the net change of paid workers, with growth signalling economic expansion.
The market expects a reading of 200k, up from 12k in October. The number of monthly payrolls is expected to return to normal after October’s report was impacted by the Boeing strike, which is now over, and the fallout from hurricanes that hit the south. Should Friday’s reading come out posting positive figures for the labour market, we could see the Dollar strengthen, pegging back the back end of last week’s gains for its major peers. If the reading is positive, it will signal resilience in the labour market, reinforcing the view that the Federal Reserve may hold rates higher for longer into 2025.
The week ahead will be dominated by US economic data, particularly the NFP report, which could significantly influence expectations for Fed policy in 2025. With the Fed’s blackout period beginning on Saturday, speeches from Fed officials early in the week will provide important clues about the central bank’s future actions. Meanwhile, GBP and EUR are likely to be more reactive to global risk sentiment and any surprises in US economic data. Geopolitical risks, especially regarding trade, will remain a key factor to monitor for potential volatility across currency pairs. Stay in close contact with our friendly team, who can help assess your options to minimise risk ahead of your future currency requirements