During the European session, traders will focus on the Flash Purchasing Managers’ Index (PMI) releases for the UK and the major Eurozone economies. However, these figures are unlikely to significantly influence the central banks’ policies.
The Bank of England (BoE) is expected to announce a 25 basis point rate cut, lowering the Bank Rate to 3.75%. Following this move, the BoE is likely to proceed cautiously, as the interest rate will remain within their “quite broad” neutral range of 2-4%. Market consensus anticipates at least one more rate cut in 2026 after Thursday’s decision.
In contrast, the European Central Bank (ECB) is expected to maintain current settings with no changes, while also keeping its forward guidance deliberately vague. ECB officials have repeatedly emphasised that future policy moves could go either way and that they will not react to minor or short-term fluctuations around their 2% inflation target.
The American session will centre almost exclusively on the US Non-Farm Payrolls (NFP) report, with market attention largely overshadowing the release of US Flash PMIs. The November payrolls figure is forecast at 50,000 new jobs, down from 119,000 in the previous month. The Unemployment Rate is expected to hold steady at 4.4%. Average Hourly Earnings are projected to rise by 3.6% year-on-year, slightly lower than the prior 3.8%, and the monthly increase is forecast at 0.3%, up from 0.2%.
It is worth noting that the NFP data this month may be somewhat noisy due to disruptions in data collection caused by recent government shutdowns. Moreover, Federal Reserve Chair Jerome Powell has remarked that recent job gains may have been overstated by about 60,000, and the Fed believes there is possibly a monthly payroll reduction of around 20,000 jobs. Consequently, the Unemployment Rate is likely to be the key figure influencing market reaction, although significant deviations in payroll numbers will also attract attention.
Central bank speakers to watch include ECB’s Villeroy, known for his dovish stance and voter status, speaking at 11:30 GMT (06:30 ET), and Bank of Canada Governor Macklem, neutral in outlook and also a voter, speaking at 17:45 GMT (12:45 ET).
Original Source: Giuseppe Dellamotta of investinglive.com
