The Morning Update

The USD is steady, oil prices weakened, equity markets are mixed, and US yields rise ahead of key US jobs report. The USD and other major currencies consolidate ahead of the US non-farm payrolls, while the euro is set for a 2nd week of gains against the USD despite the political turmoil in France. Chinese equities rose as investors positioned for fresh economic support measures from a key policy meeting starting on the 11th Dec. French equities strengthened over 1% after National Rally leader Le Pen told Bloomberg News a budget could be delivered within weeks. Economists forecasted that the us non-farm payrolls report will show a rebound in hiring in November from the effects of recent hurricanes and strike action. Forecasts suggest 220k jobs were added in final non-farm payrolls report before the Fed's next interest rate decision on December 18th. Elsewhere, oil prices eased with weak demand in forecast after the OPEC+ group planned supply increases and extended output cuts to the end of 2026. Bitcoin eases nearly 1% to $98.1k, while gold & silver both edge higher in early trading. In focus today, US Non-farm payrolls, Average Hourly Earnings, Michigan Consumer Sentiment Index, UoM 5-year CPI, CAD Ivey PMI, & CAD Net Change in Employment will help drive direction to currency markets.

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In other news. Investors pour $140 bln into US stock funds after the Trump election victory. UK house prices rise at fastest pace in 2 years. Macron vows not to step aside after fall of French government. US payrolls seen up in November as Boeing workers return, hurricanes over. Trump appoints former PayPal exec David Sacks as AI & Crypto czar. South Korea's President Yoon must be suspended, his party leader says. policy scour New York for suspect two days after UnitedHealth executive gunned down. Rattled by China, the West scrambles to rejig critical minerals supply chains. Portfolio manager says 'steer clear' of TD for now after bank cuts guidance. South Korean markets shaky on a second martial law rumours; other Asian markets mixed.

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In currency markets. G10 currencies steady ahead of US jobs data. The Korean Won weakens on 2nd martial law rumours. Chinese Yuan looks set for a 10th weekly drop as China faces Trump's tariff threats. CNY eases 0.1%, while other Asian currencies are flat on average against the USD. Trading currencies come under pressure, with NZD tumbling 0.6%, AUD & NOK weakening 0.45%, JPY easing 0.3%, MXN, ZAR & SEK down 0.2%, CHF up 0.1% against the USD.

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In commodity markets. Oil prices weakened by 0.9%. Natural Gas prices tumbled by 1.9%. Gold prices up by 0.25%. Silver prices firmed by 0.4%. Copper prices rallied by 1.1%. Wheat prices eased by 0.4%, and Soybean prices are down by 0.15%.

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CAD eases in early trading, with investors sidelined ahead of critical US & Canadian Jobs data and CAD Ivey PMI report. Tariffs continue to be the primary focus for Canadian markets; the BoC said if Trump follows through on his threat it would have an impact on both economies and the central bank would incorporate those into its economic forecasts. Focus will be on the Canadian unemployment rate which is expected at 6.6%, with the net change in employment up to 25k from 14.5K in October. Investors will be monitoring the employment data for guidance on the BoC interest rate decision next week.

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EURCAD holds steady ahead of key Canadian jobs reports.

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EUR stalls below 1.0600 ahead of the US NFP report. A softer risk tone, political uncertainty in France and caution ahead of the US jobs report is capping the euros ability to rally through 1.0600. Markets are widely expected to cut rates by 25 bps on Dec 12th, which would be ECB Lagarde's fourth cut in 2024. Focus will be on the US jobs data, which will be the last ahead of the Fed's interest rate cut on the 18th Dec. In a Reuters Column by Mike Dolan, he commented that the ECB would happily, if quietly, cheer an even weaker euro exchange rate. Intraday, the US NFP report will be the primary driver for the euro's direction.

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GBPEUR holds steady near multi-week highs ahead of today's US jobs data, heading into EBC Dec 12 & BoE Dec 19th interest rate decisions.

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GBP holds above 1.2750, at multi-week highs heading into the US jobs report. The pound looks set a second week of upward momentum as investors continue to favour the pound with the UK avoiding threats of Trump sanctions. Earlier in the week the BoE Governor predicted four rate cuts in 2025, but fears of persistent UK inflation, saw BoE Hawk Greene to say she expected inflation levels to hold above 2% target in the medium term. Today's Halifax House Prices y/y rose to 4.8% vs 4% in October, and m/m prices jumped to 1.3% vs 0.2% in October. Intraday the US jobs data will be the primary driver for the pound today.