- The US economic outlook continues to drive markets as we await key employment data in the coming days which may influence the FOMC when they hold their final policy meeting of 2024 on 17 and 18 December. Ahead of the blackout period Fed officials will be vocal in the coming days with several yesterday suggesting that they expect the central bank to continue cutting rates throughout 2025. Fed Governor Christopher Waller said that he is inclined to vote to cut rates later this month but added that upcoming data could still make the case for holding rates unchanged. Two of his colleagues were equally non-committal about a December cut with New York Fed President John Williams saying, “the path for policy will depend on the data” and his Atlanta Fed counterpart Raphael Bostic saying, “I’m keeping my options open.” Markets are currently pricing a 70% chance of a 25bp cut when the FOMC meet later this month, with Friday’s NFP report and next weeks inflation report eagerly awaited.
- The greenback remains well supported with EURUSD consolidating around 1.05 with the single currency weighed down by French politics. A vote of no confidence in the French government appears to be looming with the spread between French and German treasuries widening to levels last seen in 2012 putting further pressure on the euro. EURUSD remains in a downtrend with the market expecting a further rate cut from the ECB at the 12 December meeting and last month’s low of 1.0335 looming.
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