December 8, 2023

“The US Dollar weakened against major currencies yesterday as risk sentiment returned in markets, ending the USD Index’s three-day rise. Market focus turns to the US November jobs report, including Nonfarm Payrolls and wage data, ahead of the weekend. Also, the preliminary December Consumer Sentiment Survey from the University of Michigan is due.”

Tim Hallinan – Trading Director

Main Headlines

Ahead of a critical election year, leading Wall Street bankers have cautioned Congress about the potential adverse effects on the American economy due to new regulatory measures suggested by President Biden’s administration. In a pre-emptive move, chiefs from major financial institutions including JPMorgan Chase, Citigroup, and Goldman Sachs have appealed for careful consideration of these regulations. They specifically pointed out the challenges posed by the Federal Reserve’s proposal to mandate higher capital reserves for major banks.

Despite global trends towards reducing interest rates, the Bank of England is poised to maintain its stringent stance. While other significant central banks, such as the European Central Bank and the U.S. Federal Reserve, indicate a potential shift in their anti-inflation strategies, the BoE is expected to keep borrowing costs at a peak on December 14th. This steadfast approach is aimed at curbing the persistent inflation within the UK.

GBP

Sterling is weaker than most major currencies in the early morning trade. The pace of salary increases in the UK is showing signs of slowing down, with companies becoming more prudent in their recruitment strategies. A recent survey by KPMG and REC reveals that the rate of growth in starting salaries for new employees in November was the lowest in over two and a half years. While demand remains for highly skilled individuals, tighter budgets are leading to more subdued salary inflation.

EUR

Euro is stronger against Sterling and weaker against the Dollar this morning. European economic growth came to a halt in the third quarter, as per the latest figures from Eurostat. The Eurozone’s GDP showed a slight decline of 0.1%, aligning with earlier estimates and matching the previous quarter’s modest growth. This stagnation places the region in a precarious position, potentially on the brink of a recession.

USD

The Dollar is well bid against most major currencies overnight. The upcoming release of the U.S. November employment report by the Bureau of Labor Statistics is set to create ripples in the financial markets. Expectations are set for the creation of 180,000 new jobs, keeping the unemployment rate steady at 3.9%. This data is anticipated to have significant impacts on various market sectors, including currency rates, gold prices, and stock indices.

Markets

European markets experienced a modest rise this morning, with investors’ attention globally turning towards the impending U.S. jobs report for November. The Stoxx 600 index saw a slight increase, with the travel and leisure sector leading the gains. Meanwhile, U.S. stock futures remained relatively stable, following a break in the recent downward trend of major indices such as the Dow and the S&P 500.

Main Economic Data/Central Banks/Government (All Times CET)

8:00 a.m.: Germany Nov. CPI
8:00 a.m.: Sweden Oct. GDP
8:35 a.m.: ECB’s Muller speaks
8:45 a.m.: France 3Q Wages
10:30 a.m.: BOE publishes Inflation Attitudes Survey
2:30 p.m.: US Nov. Jobs Report
4:00 p.m.: US Dec. UMich Sentiment
5:00 p.m.: Russia Nov. CPI

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