• USD Faces Mixed Signals: US dollar rally slows as confidence rises but job openings cool, with JOLTS data showing a dip and fewer job quits, hinting at job market uncertainty.
• Growth & Inflation in Focus: US third-quarter GDP and PCE data could sustain dollar strength if growth stays robust, ahead of crucial payrolls data on Friday that could influence Fed easing expectations.
• Eurozone Economic Data Surge: Eurozone releases, including GDP and inflation, may impact markets; German growth is expected to contract, with ECB likely staying dovish on inflation.
• EUR/USD Range Likely Steady: With limited catalysts for the ECB to ease further, EUR/USD is anticipated to stay near 1.07, reflecting a wide USD interest rate differential.
• UK Budget Caution Expected: UK Labour’s first budget might avoid big fiscal moves; a modest Gilt supply increase would stabilize sterling, while anything over £300bn could trigger GBP pressure.

USD: Signs of Slowdown in Jobs Surge

The US dollar rally has hit a speed bump as mixed economic data tempers enthusiasm. Consumer confidence jumped from 99.5 to 108.7, marking the strongest rise since March 2021 and indicating more optimism around future job prospects—the first shift since July 2023. But the latest JOLTS report tells a different story, showing a cooling jobs market. Job openings fell from 8.0 million to 7.4 million in September, following a revised August figure of 7.8 million. Additionally, the quits rate dropped sharply to 1.9% from its early 2022 high of 3%, reflecting lower job-switching activity and signaling a mix of fewer job openings and a stronger preference for job security over potential salary gains.

Today’s third-quarter GDP data, alongside core PCE numbers (projected at 2.1% QoQ, down from 2.8%), could sustain the dollar if they point to robust economic momentum. The ADP payroll forecast for October, expected to dip from 143,000 to 111,000, will offer another snapshot ahead of Friday’s broader payroll report, which markets see as key for Fed decisions. For now, a strong growth print may prevent a dollar downturn, with volatility rising as Trump hedges surface.

EUR: Eurozone Economic Updates Galore

The eurozone has a data-packed day ahead, beginning with a slight positive surprise from French GDP, which grew 0.4% QoQ. Next, Spanish, German, and Italian growth numbers will pave the way for the eurozone GDP release, expected to show stagnating growth overall. Germany’s GDP forecast points to a second consecutive 0.1% contraction, while eurozone-wide growth is expected at 0.2% QoQ. The ECB’s recent focus on downside risks to growth makes these numbers market-relevant, even as the Governing Council has signaled some leniency around inflation data. Today, Germany and Spain release their October inflation figures, with eurozone flash estimates tomorrow.

With EUR/USD hovering near 1.080, markets may stay cautious on the ECB’s easing potential. Provided growth and inflation figures meet expectations, the currency pair could stay close to 1.07, given the wide USD short-term swap rate differential.

GBP: UK Labour’s First Budget – Caution or Boldness?

Today, Chancellor Rachel Reeves unveils the Labour government’s debut budget at 13:30 CET. The question is: Will sterling gain on pro-growth measures and improved real yields, or remain steady if fiscal policies tread lightly? A higher fiscal risk premium could emerge if spending increases necessitate a greater Gilt supply—exceeding consensus by around £10-20 billion would likely be digestible, but anything over £300 billion could strain sterling. The EUR/GBP is near 0.8300, driven by a dovish ECB stance, with no clear catalyst for a rebound. A drop below 0.8300 would target the next support at 0.8250/80.