Friday's US employment figures have increased the likelihood of the Federal Reserve (Fed) trimming interest rates by 25 basis points later this month.
Only 227,000 jobs were added, unemployment rate rose to 4.1% and monthly wage growth came in at 0.4%. These numbers initially caused the USD to weaken but the currency recovered soon after Fed member Bowman's comments that lowering rates too quickly could reignite inflation and she prefers a more cautious and gradual approach.
*Daily move - against G10 rates at 7:30am, 09.12.24
** Indicative rates - interbank rates at 7:30am, 09.12.24
A big week of central bank action is ahead. Interest rate decisions from Australia, Canada, Switzerland, and Europe are all due out.
Markets are expecting no rate change by the Reserve Bank of Australia (RBA), a 50bps rate cut by the Bank of Canada (BoC), a 25bps rate cut by the European Central Bank (ECB), and a 60% chance of a 50bps cut by the Swiss National Bank.
Considering the threat of trade tariffs from President-elect Donald Trump, these rate outlooks will be key.
US CPI will also be a key metric this week. Markets have settled on pricing in a 25bps cut in next week's Fed meeting but any upside surprises could raise the question of whether a rate cut is warranted at all.
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