US jobs data on Friday.

The latest Challenger data recorded a sharp increase in layoffs to near 77,000 for November from below 34,000 previously and an increase of over 400% from November 2022 while there has been a 6% increase for the first 11 months of the year with sharp losses in the tech sector.

The ISM manufacturing index edged lower into contraction territory at 49.0 for November from 50.2 the previous month which was weaker than forecasts of 49.8 and the weakest reading since May 2020.

There was a sharper retreat in new orders and a small increase in production. There was also a reported dip in employment for the month while prices fell at a faster rate with the prices index also registering the lowest reading since May 2020.

The core PCE prices index increased 0.2% for October and slightly below expectations of 0.3% with the year-on-year rate declining to 5.0% from 5.2% which was in line with expectations.

Markets overall remained more confident over peak inflation in the US.

The dollar remained under pressure on Thursday with the dollar index dipping to fresh 15-week lows and touched 5-month lows in early Europe on Friday.

Lower US yields supported the yen and the Japanese currency has posted strong gains over the past 24 hours with stop-loss yen buying.

USD/JPY dipped to 3-month lows with a break below 135.0 with EUR/JPY at 6-week lows below 142.0.

The latest US employment data will be released on Friday with expectations of an increase in payrolls of around 200,000 with no change in the unemployment rate at 3.7%.

Average earnings data will be important with expectations of a 0.3% increase.

The Euro-Zone PMI manufacturing index was revised slightly lower for November and remained in contraction. Overall dollar sentiment remained weaker on the day on expectations of a less hawkish Fed stance. Lower yields also undermined the US currency. EUR/USD posted further strong gains to 3-month highs above 1.0500 and a peak at 1.0540.

The dollar continued to post strong losses against the yen. USD/JPY dipped sharply to fresh 3-month lows at 135.00 and posted further sharp losses to near 134.70 on Friday as 135.00 support was broken.

The Swiss franc overall was little changed with EUR/CHF gains to 0.9865. USD/CHF posted sharp losses to lows at 0.9360.

Sterling posted strong gains amid a dip in US yield expectations with little in the way of domestic developments. GBP/USD surged to 5-month highs above 1.2300 before a correction to 1.2230 on Friday.

Commodity currencies posted further gains before a sharp corrective reaction. AUD/USD hit highs at 0.6845 before a dip back below 0.6800 and settled around 0.6820. The Canadian dollar under-performed and USD/CAD posted net gains to 1.3435 from highs of 1.3470.

Economic Calendar

13:30US Average Hourly Earnings m/m0.30%0.40%
13:30US Non-Farm Employment Change200K261K
13:30US Unemployment Rate3.70%3.70%

*All rates shown are indicative of interbank rates and should only be used for indication purposes only. It is important to note that foreign exchange rates fluctuate and that rates may vary depending on the amount and the base currency that is purchased or sold. Rates are correct as of 8:00am UK time. CentralFX are not responsible for the rates shown.