North American Summary and Highlights 6 December
Overview - The USD initially slipped on a healthy non-farm payroll report, though ended firmer, with Fed speakers making it clear that the decision for the December 18 FOMC meeting has not yet been decided.
North American session
November’s US non-farm payroll with a 227k increase was near consensus, but with 56k in upward back month revisions. Average hourly earnings were on the firm side with a 0.4% increase but unemployment rose to 4.2% from 4.1%. Overall, a fairly strong report, but with markets seeing it as not quite strong enough to cause the FOMC to pause in December the USD initially slipped on the release, EUR/USD rising to 1.0630, GBP/USD above 1.28 and USD/JPY down a big figure to 149.40.
However, with Fed talk from Bowman, Goolsbee, Hammack and Daly making it clear a December ease was far from assured, and the Michigan CSI rising in its preliminary December release to 74.0 from 71.8, the USD more than fully erased its post-data losses, EUR/USD falling to near 1.0550 and GBP/USD below 1.2750. USD/JPY however saw only a partial reversal of its post-data losses, settling near 150.
Canadian employment saw a stronger than expected 50.5k rise, but with 45k of that coming in the public sector and unemployment up to 6.8% from 6.5%, USD/CAD rose by a big figure to 1.4150. AUD/USD also slipped, below .64, with AUD/CAD above pre-data levels but well off its highs.
European morning session
USD/JPY was the main mover though the European morning, gaining more than half a figure on the session and reaching a high of 150.70. There wasn’t a lot of news behind the move, although the Japanese wage data overnight may have been seen as slightly less strong than required to secure a BoJ hike in December. There are now just 10bps priced in for the December meeting, and 10 year JGB yields have also edged a little lower.
Otherwise, the USD was slightly softer against EUR, with EUR/USD reaching a high of 1.0594. There was nothing obvious behind the move. German industrial production for October was weaker than expected, falling 1% on the month, but stronger data in recent months means the underlying trend remains marginally positive. Eurozone GDP was unrevised a 0.4% for Q3, while employment rose 0.2%. EUR/CHF was a little softer, dropping back from 0.93 to below 0.9290, while EUR/NOK and EUR/SEK were bother firmer, rising around 3 figures each.